How will Trump's auto tariffs impact car dealerships?

Yahoo

28-03-2025

AUSTIN (KXAN) – Roberto Jaimes of South Austin's Javi's Auto Sales said the last few years in the automobile industry have been a bumpy ride.
'It has been tough,' Jaimes said. 'Car values have gone through the roof because there was a shortage for a while, and they haven't gone back down,' he added. 'It has been a tough business – up and down.'
READ MORE: Trump places 25% tariff on imported autos, expecting to raise $100 billion in tax revenues
Then, on Wednesday, President Donald Trump said he would place a 25% tariff on automobile and auto part imports. His administration says this will encourage auto companies to move their operations to the U.S. or expand the ones already here.
'It's just another thing, another wave we have to ride, pretty much,' Jaimes said.
Former chief economist of the first Trump White House's Office of Management and Budget, Vance Ginn, said the tariffs, which are supposed to go into effect on April 3, will negatively impact U.S. dealerships and consumers.
'Tariffs are nothing more than a tax on Americans when you purchase that good or service; in this case, it's on vehicles,' Ginn said. 'If you have a 25% tariff, you're bound to raise the price of cars.'
'I think there will be a big hit on dealerships,' he continued.
In 2024, the U.S. imported around 8 million automobiles – worth $244 billion. Nearly 200 billion worth of auto parts also came to the U.S. that year, according to the Commerce Department.
The majority of foreign vehicles in 2024 came from Mexico, Japan and South Korea. The countries sending the U.S. the most auto parts were Mexico, Canada and China, according to the Associated Press.
Companies sending products from Canada and Mexico that comply with the United States-Mexico-Canada Agreement (USMCA) will be exempt from the tariffs for the time being, according to NBC.
'One reason we import a lot of the parts that go into vehicles is because it's cheaper to purchase from other countries,' Ginn said. 'Whenever you think about American tariffs on vehicles, it's a tax on Americans — on all of us. It's bound to raise the price of cars at the end of the day.'
Ginn said the tariffs will adversely impact people of lower socioeconomic status.
'The ones that are hurt the most are actually the ones that can least afford it, the lower income folks,' he said. 'They're the ones likely to see a higher price and not have an increase in income.'
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