Leading groups in the auto industry have come together to warn President Donald Trump about the dangers of introducing a 25% tariff on automotive imports. This group, made up of six entities representing the majority of the auto industry, sent a letter to government officials this week seeking to stop the proposed tariff from going into effect on May 3.
According to the auto industry members behind the letter, Trump’s tariffs could cause immense damage to the sector. That includes the potential shutdown of suppliers, which could have an overarching effect on the industry, resulting in production delays, layoffs, and increased prices.
Dave Kelleher, president of David Auto Group, separately warned of similar problems facing the auto industry if tariffs go into effect. He noted the tariffs would just hit automakers, but would also affect franchise locations that sell vehicles. This could result in these businesses having to lay off workers.
Not Even Used Cars Are Safe from Tariffs
While some might believe used cars, or those already owned by consumers, won’t suffer under tariffs, experts warn this isn’t true. Over 110 million vehicles are in the prime age for needing repairs. With increased auto tariffs, consumers will have to pay more for the parts needed to repair these vehicles.
On that same note, this could increase the price to rent vehicles, as fleet operators, such as Hertz (HTZ) and Avis Budget (CAR), spend more to maintain the units they own. Even with those increased costs, more consumers might weigh renting vehicles over buying them to avoid increased prices from automakers.
Will Trump Change His Mind on Auto Tariffs?
President Trump’s tariff strategy has been a whirlwind of introducing steep tariffs, delaying them, announcing new tariffs, and repeating that cycle. All of this appears designed to unnerve other countries and strengthen the U.S.’s bargaining power. With that in mind, it’s possible President Trump doesn’t actually go forward with auto industry tariffs, but only time will tell.
Until then, traders will want to remain briefed on all of the latest economic happenings. Fortunately, TipRanks has that covered with its Economic Calendar and Economic Indicators Dashboard.
