Panel: Only Certainty Under Tariffs Is Vehicle Prices Are Going Up
Rows of used cars are seen in this aerial view of the Manheim Auto Auction facility in Ocoee, ... More Florida. Tariffs imposed by the Trump administration are forecast to keep supplies of used vehicles tight. (Photo by Paul Hennessy/SOPA Images/LightRocket via Getty Images)
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.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Wall Street Journal
23 minutes ago
- Wall Street Journal
It's Opening Night for the MAGA Makeover of the Kennedy Center
When the curtain rises in the John F. Kennedy Center Opera House for a performance of 'Les Misérables' this week, President Trump is scheduled to be surrounded by supporters who have paid up to $2 million to watch the musical with him. A coup de théâtre earlier this year put the president and his deputies in charge of programming, fundraising and staff at the famous cultural center. Now, a president who skipped Kennedy Center performances during his first term will stride into an institution he has bent to his will.
Politico
25 minutes ago
- Politico
Newsom blasts deployment of National Guard to LA as ‘purposefully inflammatory'
LOS ANGELES — California Gov. Gavin Newsom on Saturday denounced President Donald Trump's plan to deploy thousands of National Guard troops to quell pro-immigrant demonstrators in the Los Angeles area, calling the action 'purposefully inflammatory.' The Democrat's remarks came after Tom Homan, Trump's border czar, told Fox News that the administration planned to send National Guard troops to the area. In a statement, Newsom said Trump was moving to take over the California National Guard and deploy 2,000 soldiers, which the governor said would 'only escalate tensions' after protestors confronted immigration agents making raids on local businesses. Trump's move came without Newsom's signature, presumably by invoking Title 10, the legal basis for activating and mobilizing the Guard. In a social media post, Trump said, 'If Governor Gavin Newscum, of California, and Mayor Karen Bass, of Los Angeles, can't do their jobs, which everyone knows they can't, then the Federal Government will step in and solve the problem, RIOTS & LOOTERS, the way it should be solved!!!' The standoff in Paramount, a small city in southeast Los Angeles County, marks the second consecutive day of clashes in the region over high-profile immigration raids. At least 44 people were arrested on Friday on suspicion of immigration violations. Among those arrested was the president of the labor union SEIU California, David Huerta, whose injuries during his detainment required brief hospitalization and set off a wave of condemnation from California Democratic officials, including Newsom. A video of Huerta's arrest showed officers knocking the labor union leader to the ground. In Paramount, federal agents in riot gears squared off against protestors, using tear gas and flash-bang grenades to disperse the crowds. Homan told Fox News that while people had a First Amendment right to protest, there would be consequences for 'crossing the line' and impeding ICE's operations. 'We're already ahead of the game. We're already mobilizing. We're going to bring in the National Guard tonight,' he said. 'We're going to continue doing our job. We're going to push back on these people and we're going to enforce the law.' Newsom, in his statement, said such federal intervention was unnecessary. 'LA authorities are able to access law enforcement assistance at a moment's notice. We are in close coordination with the city and county, and there is currently no unmet need,' Newsom said. 'The Guard has been admirably serving LA throughout recovery. This is the wrong mission and will erode public trust.'
Miami Herald
an hour ago
- Miami Herald
Legendary fund manager sends blunt 6-word message on bitcoin
It's been a wild ride for markets since President Trump announced widespread tariffs on April 2. Trump's so-called "Liberation Day" announcement included higher tariff rates than hoped, leading to investors reworking their expectations for the U.S. economy. There's evidence that a potential U.S. economic slowdown may already be underway, and despite ongoing tariff negotiations, risks remain that tariffs may push the economy into stagflation or outright recession. That risk continues to cast a shadow over risk assets, including stocks and cryptocurrency, which tend to perform best when wallets are fat and consumers and businesses are increasing spending, rather than ratcheting back. Related: President Trump sends harsh message to Federal Reserve on interest rate cuts The stock market sell-off was big, with the S&P 500 and Nasdaq Composite falling 19% and 24% from early-year highs, respectively. Bitcoin fell alongside stocks, losing 27% from its January high through April 8. The drop in risk assets was unsettling, but created opportunity for risk-tolerant investors to 'buy the dip.' Since President Trump paused most of the reciprocal tariffs announced on April 2 on April 9, the Nasdaq and bitcoin have surged higher by 28% and 39% respectively. The gains have been impressive, but not everyone is convinced it will be clear sailing from here. Veteran Wall Street bond manager Bill Gross has navigated good and bad markets since 1971. He co-founded Pacific Investment Management Co., or PIMCO, a huge firm with $2 trillion under management. He formerly managed over $270 billion via PIMCO's Total Return Fund, earning him the "Bond King" nickname before moving to Janus Henderson Investors from 2014 to 2019. Gross offered a blunt message about bitcoin this week, and given his track record, his opinion is worth considering. Image source: Bloomberg/Getty Images There's been considerable debate about what will happen to the economy next. Many think tariffs will tax cash-strapped consumers later this year, lowering economic growth, even as businesses press pause on projects awaiting trade deal clarity. Others believe the risks of tariffs derailing activity are overblown and temporary. The jobs market arguably remains healthy, given that the unemployment rate is relatively low at 4.2%. However, unemployment is up from 3.4% in 2023, and companies announced 93,816 job cuts in May, up 47% year over year, according to Challenger, Grey, & Christmas. Related: Analyst resets stocks, gold outlook after rally The uptick in joblessness prompted the Federal Reserve to cut interest rates by 1% last year; however, the Fed has paused on additional cuts over fear that reducing rates could swell inflation, given that tariffs are only beginning to be felt on prices. The Fed's hesitancy to cut interest rates has drawn sharp criticism from the White House, ostensibly because it recognizes tariffs may slow GDP, worsening unemployment. If the economy were to drop off, and the Fed remained unwilling to budge on interest rates, Congress may be unable to adjust fiscal policy fast enough to bridge the gap, given our deficit and mountain of debt. The U.S. deficit is over $1.8 trillion, representing roughly 6.4% of gross domestic product. Meanwhile, total public debt outstanding is approximately 122% of GDP, far higher than its 75% level in 2008 during the Great Recession. The economic uncertainty has led to bitcoin and gold finding willing buyers as market participants look to diversify risk. Bill Gross's 50 years of Wall Street experience mean he's seen many market pops and drops, including the Nifty 50, skyrocketing inflation in the 1970s, the S&L crisis in the late 80s and early 90s, the Internet boom and bust, the Great Recession, Covid, and the 2002 bear market. More Experts Fed official sends strong message about interest-rate cutsBillionaire fund manager sends surprising message on trade deficitHedge-fund manager sees U.S. becoming Greece In short, Gross has been around the block, making his take on bitcoin worth paying attention to. Gross believes bitcoin is valuable because individuals and others widely hold it, and its supply is capped. "There are now approximately 19.4 million Bitcoins priced at about 107,000 each. The supply of total coins is capped at 21 million over the next few years of "mining," wrote Gross recently on X. "While hard to estimate, approximately 90-95% are held by individuals, institutions, and the moment there is "value" to a Bitcoin." However, Gross appears to think that bitcoin's value may be reflected in its price after its recent rally. "It is in the "meme stock" world for the most part - more valuable than a Trump coin but subject to excessive volatility with underlying value hard to measure," wrote Gross. "There are better risk/reward opportunities," added Gross bluntly. "Any asset category using high leverage is a future risk not only to the asset itself but to the financial system as a whole." Related: Veteran fund manager resets stock market forecast amid Musk, Trump fallout The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
