The Trump administration’s recent decision to impose 25% tariffs on imported vehicles will likely have a significant impact on the US auto industry, according to analysts. The tariffs are expected to lead to a decline in vehicle sales of up to 700,000 units this year, and a decrease in auto production in North America by 1.28 million cars.
Industry experts warn that higher prices and limited inventory will affect consumers’ ability and willingness to buy cars. Patrick Anderson, founder of Anderson Economic Group, said the tariffs will result in a “significant drop in auto sales” due to the direct impact on consumer purchasing power.
The US tariffs have already led to Canada imposing its own 25% tariff on imported vehicles that don’t comply with the US-Mexico-Canada Agreement. Automakers may benefit from this arrangement, but experts caution that the impact of the US tariffs will still be felt globally.
“Tariffs may be aimed at leveling the playing field, but in the short term they risk raising prices and limiting inventory,” said Zach Shefska, CEO of CarEdge. The industry is already experiencing supply chain issues and low used car availability due to the pandemic.
Production cuts sparked by the US tariffs could lead to layoffs in major automotive manufacturing hubs such as Illinois, Michigan, and Ohio. Stellantis has already paused production at plants in Canada and Mexico and furloughed 900 workers.
The move is part of a broader strategy to protect domestic jobs and stimulate growth through tariffs. However, industry experts disagree on the effectiveness of this approach, with some arguing it will ultimately harm consumers and drive prices up.
Source: https://www.cbsnews.com/news/trump-tariffs-car-prices-auto-sales