An independent government report on President Donald Trump’s new North American trade deal estimates it will lead to higher car prices for U.S. consumers and a decline in auto sales even as it has a modest positive impact on the broader economy, undercutting one of the White House’s key sales pitches for the agreement.

In its assessment of the new U.S.-Mexico-Canada Agreement, the International Trade Commission on April 18 found it would have a modest beneficial impact on the American...