A recent update from Cox Automotive further underlines that the Trump administration’s 25 per cent tariffs across North America will be felt in the United States.
They said around 44 per cent of the new vehicles sold in the U.S. in 2024 came from countries across North America, Europe and Asia. The auto industry is also facing high costs, which translates to lower sales volume and also fewer affordable options for consumers.
“How long higher tariffs are held in place is the industry’s big question right now,” said Charlie Chesbrough, Senior Economist. “Higher prices and border disruptions could result in lower volume. Our forecast of 16.3 million new-vehicle sales in 2025, at least at this moment, is now in question.”
As for Jonathan Smoke, Chief Economist, he said the unthinkable is coming true with tariffs being applied to free trade partners across North America. “We have no history to study for this, but there will be implications.”
Smoke said it is not clear if the U.S. government is able to efficiently track the movement of goods and impose duties, but that “production will be disrupted, supply will be restricted, and prices will go up.”
The tariffs come at a time when supply is already tight and tax refund season approaches. Smoke said consumers with potential buying plans may act quickly, which would be positive for sale volume in the short term. But once prices shift higher, he said 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,” he said — echoing Chesbrough’s earlier comments.
