The only sure thing as President Donald Trump’s tariffs unfold is that prices of cars and trucks are going up, a livestream panel said Thursday.
“There is no way to sugarcoat it, everything is going to be more expensive,” Kevin Tynan, auto analyst and director of research as Presidio Group, said during the livestream.
Cars.com and trade publication Automotive News conducted the livestream. Besides Tynan, participants included representatives of dealership organizations.
On Wednesday, Trump announced 25% tariffs on imported autos and parts. The president cited “underlying conditions, including a lack of reciprocity in our bilateral trade relationships, disparate tariff rates and non-tariff barriers, and U.S. trading partners’ economic policies that suppress domestic wages and consumption” for the move.
U.S. trade deficits “constitute an unusual and extraordinary threat to the national security and economy of the United States,” according to the announcement.
Tariffs are levied on companies importing goods. Typically, those costs are passed onto consumers. Tariffs are not a transfer of money from one country to another.
In North America, automotive supply chains crisscross borders, often multiple times. The new automotive tariffs will have a widespread impact.
“There is no vehicle that is 100% American,” said Jenni Newman, editor-in-chief of Cars.com. “There are a lot of moving pieces. This is still a global industry.”
Some dealers are working to sell off vehicles produced before the tariffs hit and prices increase.
Analyst Tyson said automakers “will have the heaviest lift going forward.”
New factories take years to construct. So, bringing in new auto plants won’t happen quickly.
According to Tyson, North American auto plants operate at around 65% capacity. “You want it at 80%,” he added.
Automakers will have to pass on the costs of the tariffs to customers sooner or later, Tynan said. The companies “can’t absorb the tariffs,” he said. “It’s not sustainable.”
One possibility is that consumers may hold on to their vehicles longer because of higher prices.
“Dealers are putting a greater emphasis on service,” said Jennifer Morand, president of the Chicago Auto Trade Association.
For new vehicles, “there will be a snuggling to” manufacturer suggested retail prices, Tynan said. That means discounts for many vehicles will go away.
Also, he said consumers won’t find relief buying used vehicles. The used vehicle market became tight during the pandemic. Before Trump imposed his tariffs, some expected that market to see some relief.
Tynan said he expects “a super tight used vehicle market just before it was set to loosen up.”
