Tariffs of 25 percent were put in place by the Trump Administration this week on goods from Mexico and Canada. Tariffs were also doubled on products from China to 10 percent.
But the impact on the auto industry will now be delayed. The Trump Administration Wednesday announced an exemption on auto tariffs until April 2.
“We spoke with the Big Three auto dealers. We are going to give a one-month exemption on any autos coming through USMCA,” Trump said in a statement White House Press Secretary Karoline Leavitt read in a White House briefing. “Reciprocal tariffs will still go into effect on April 2. But at the request of the companies associated with USMCA, the president is giving them an exemption for one month so they’re not at an economic disadvantage.”
Ford, GM and Stellantis requested the call and made the ask according to Leavitt.
Officials in those three countries had announced plans for retaliatory tariffs after news of the tariffs.
With parts and vehicles coming from the three impacted countries, tariffs are expected to have a dramatic impact on the car industry, from rising prices on new vehicles and parts for the used vehicle industry.
“For economists like myself, the unthinkable is coming true, with tariffs being applied to our free trade partners across North America. We have no history to study for this, but there will be implications. It is not even clear if the U.S. government has a way to efficiently track the movement of goods and impose duties, but set that aside: Production will be disrupted, supply will be restricted, and prices will go up,” said Cox Automotive Chief Economist Jonathan Smoke.
“This is happening at a moment when supply is tight already, and just as tax refund season approaches critical mass in dollars being distributed to consumers. Consumers with potential buying plans are very likely to act swiftly, so the short term is likely positive for sale volume. But once prices shift higher, demand will decline. Pending on how long this tariff stance lasts, it will also jeopardize the trajectory of the overall economy, further weakening growth potential later in the year.”
Experts warned the tariffs could increase car prices by thousands of dollars as interest rates and prices remain elevated. The average new car finance rate was 9.69 percent in February and the used car rate was 14.73 percent, according to Cox Automotive. Kelley Blue Book estimated the average new car price at $48,641 in January and the used vehicle price at $25,565.
Automakers raised concern on the impact of the tariffs before the delay was announced.
“We continue to believe that vehicles and parts that meet the USMCA’s stringent domestic and regional content requirements should be exempt from the tariff increase. Our American automakers, who invested billions in the U.S. to meet these requirements, should not have their competitiveness undermined by tariffs that will raise the cost of building vehicles in the United States and stymie investment in the American workforce, while our competitors from outside of North America benefit from easy access to our home market,” said Governor Matt Blunt, president of the American Automotive Policy Council (AAPC) represents American Automakers Ford Motor Company, General Motors Company and Stellantis.
NIADA continues to work with its lobbyists in Washington, D.C., to get the latest information on the tariffs and monitor impact.
