The prospect of a 25% tariff on all goods from Mexico and Canada is leading some to say there could be a huge impact on the auto industry.
One metro Detroit car dealer and an economics expert explained just how the tariffs could be applied and how much of a difference they can make for consumers.
When it comes to selling vehicles in metro Detroit, Jeff Tamaroff is proud to be part of a legacy spanning nearly 60 years. He says a lifetime of changes has impacted the industry during that time. Now, new concerns involving tariffs are top of mind.
“It’s going to affect us. It’s got to,” Tamaroff said of the tariffs President Donald Trump is threatening to impose on U.S. trade partners.
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Tamaroff sells new and used vehicles at both Honda and Nissan dealers. He says his customers have come to expect great deals, but now the Trump administration’s plan to impose 25% tariffs on Canada and Mexico on March 4 will affect nearly everything sold in U.S. showrooms.
“It’s got to be passed on,” Tamaroff says. “It’ll be passed onto us, and we’ll have to pass it down to the customer.”
Meanwhile, Oakland University economics professor Michael Greiner says one sure way to save money is to buy what’s already on the lot.
“There’s a lot of evidence people are making large purchases now, out of concern for tariffs going up later,” he said.
Greiner says a 25% tariff isn’t the same as a 25% bump in sticker price; rather, vehicle could only see that 25% more on whatever portion of the car is made in Canada or Mexico. In the case of one car that was for sale, 15% comes from Mexico, meaning in the future, the sticker price of $34,690 would increase by about $1,300.
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Greiner adds the sweeping move is designed to put pressure on the two countries, along with China seeing a 10% tariff. In the meantime, he says it’s a “legitimate concern” that it could become too expensive for some dealerships to stay open.
As for the long-term outlook, both Greiner and Tamaroff are hopeful these plans won’t cause significant harm to the economy. But both agree that global manufacturing has made it essentially impossible to buy any vehicle made solely in the U.S.
“The North American market is completely integrated where cars are going back and forth from the United States to Canada and Mexico and back to the U.S. again,” Greiner says.
Tamaroff believes the move could also raise stress levels for dealership owners.
“It will eventually if it goes into effect," he said.
This story was originally published by Simon Shaykhet with the Scripps News Group.
