President Trump signs executive order to relieve some auto tariffs
President Donald Trump signed an executive order to relax some auto tariffs, though the industry won’t see a total exemption.
- Car shopping site Edmunds survey data shows 75% of in-market respondents say tariffs will impact purchasing decisions.
- Car dealers warn credit availability, inventory and rising costs affect purchasing far more than tariffs do.
Frankenmuth, Michigan resident Pat Fox has paid attention to the news.
Consumer confidence plunged this spring over fears of a trade-war-induced economic decline. A high-interest-rate environment and uncertainty over peace conditions in the Middle East further roiled spending habits. Vehicle sales soared in the first few months of the year, and since then, according to dealers, have slowed.
When the opportunity arose for Fox to switch into two new leases for himself and his wife — at around the same monthly payment — he didn’t hesitate to end his current contracts early.
“I just wanted to jump in so that I could control my fixed costs. With the tariffs, we know things will all be fine eventually, but I didn’t want to enter a volatile market when my leases came up,” Fox told the Detroit Free Press, part of the USA TODAY Network.
While the potential impact of President Donald Trump’s tariffs on the automotive market has yet to reach the dramatic heights industry experts forewarned, new car buyers already claim they’re a major factor in their purchasing decisions.
In a recent Edmunds survey of in-market shoppers, 44% of respondents said tariffs will definitely influence their purchase decision, and another 31% said tariffs will somewhat factor in. Just 17% said tariffs wouldn’t impact their decision at all, while the remaining 8% said they didn’t know. Edmunds based its findings on a May survey of 500 consumer respondents who had previously purchased a vehicle and planned to buy another in the next six months.
Despite rising costs for automakers from tariffs, vehicle pricing hasn’t changed that much, Edmunds notes, implying that buyers this year are allowing fears of what might happen to influence car buying behavior.
The average transaction price Edmunds reported for a new vehicle in April, for example, fell within normal ranges, reaching $48,422, up 2.2% from the prior year and 2.7% higher than March.
Hold off, or move in?
Mixed messages about when and how automotive tariffs would be levied is another major factor confusing shoppers. Many asked, ‘Should I buy now, or hold off?’
For Fox, the idea of exchanging two 2022 GMC Canyons for two GMC Sierras was a no-brainer. Because so few Canyons were produced during supply constraints at the height of the COVID-19 pandemic, his trucks kept strong residual value when he traded them in.
“The whole tariff thing, it scared me a little, but if it wasn’t right, I wouldn’t do it. It was also a great way to protect myself from the unknown,” he said. “I’m paying about $18 more a month for both trucks, and I got a bigger, better, nicer car. I think 24 months is good enough to bide your time to see what happens with tariffs.”
While many automakers cited pull-ahead sales as a main driver of success in the first quarter, meaning customers considering a new vehicle acted sooner rather than later, it’s possible a sizable chunk of potential buyers delayed a purchase.
Edmunds’ data suggests 37% of in-market shoppers report planning to buy sooner because of tariffs, while 25% said they’re in a wait-and-see approach.
For those who waited, Edmunds cautions against opting for the latest models because there aren’t as many promotions typically seen at this time of year. Joseph Yoon, Edmunds’ consumer insights analyst, advises shoppers to focus on the remaining 2025 inventory, rather than look to the 2026 model year, which the company said already accounts for one in 20 vehicles on dealer lots.
“The only question is for the brand you’re looking for, do they have enough of the model-year 2025 inventory?” he asked.
Slow foot traffic, not enough cars
Yoon said the market is in a holding pattern, with automakers trying to assure potential buyers — and customers looking to make the right purchasing decisions. The car dealers, however, are caught in the middle.
Joe Hill, general sales manager at Shea Buick GMC and Chevrolet in Flint, Michigan, sold Fox his trucks before traffic at the dealership slowed to a crawl.
“They’re not asking questions about tariffs right now. They’re simply not in the dealerships,” he said. “My theory is there was concern about tariffs and they bought in March, April and May. And now it’s quiet.”
This year, Hill sold 134 vehicles in January, 108 in February, 155 in March, 153 in April and 120 in May. In June, he has sold 92 vehicles — compared with 155 at this time last year.
“This is prime time, end of a quarter, changeover of model years,” he said. “This is the time we should be hitting home runs.”
Todd Szott, owner and operator of Szott Automotive Group, said the change in traffic at his store has been dramatic.
“The customers don’t walk in the showroom and say, ‘I’m worried about prices going up so I’m buying a car,’ ” he said. “But in reality, as things have settled down with tariffs, incentives are pretty steady. We’re fighting more affordability within certain product lines amid the interest rates — more so than any tariffs.”
Particularly at his Ford store — Szott owns five dealerships, three Stellantis, one Ford and one Toyota — the loss of return lease customers has most hampered business. Amid turmoil of COVID-19 disruptions and the chip shortage, a sizable number of leasing customers opted to buy out their vehicles, meaning those people aren’t coming back to the market now.
General Manager Brian Tellier, at Jefferson Chevrolet in Detroit, said the store is selling about half the new vehicles it typically does, because “we’re almost at COVID levels of stocking.”
General Motors has told dealers production is going on as normal, but Tellier said inventory of the most popular models are drying up. The models he needs most, he said, GM assembles in Mexico — the Equinox and Blazer — and South Korea — the Trax and Trailblazer. GM plans to shift some vehicle production to the United States, which would shield those vehicles from Trump’s tariffs, but production changes aren’t likely to occur for several years.
“Some people hear about the new car prices, they’re asking to buy out their leases,” Tellier said. “They don’t realize it could be the same or more, because of where interest rates are. Lending rates need to come down.”
Consumer choice a ‘myth’
Even though cost from tariffs isn’t making much of a difference in the normal course of business, new car pricing has had chronic affordability issues for years.
In 2024, 58.6% of new car registrations came from households with incomes over $100,000, according to data from S&P Global Mobility. The median salary for full-time workers in Michigan was $58,925 in 2024.
Consumers tend to search for the most-desired version of the vehicle they want to purchase and refine those options depending on what is available and what they can afford, Yoon said. In that sense, the notion of wide-open consumer choice is a myth.
“For many people, buying a vehicle is about practicality, not preference. If you run an HVAC business and need a truck today, you’re focused on getting the job done, not picking an option package or color,” he said. “When there’s any kind of economic uncertainty in the market, when push comes to shove, it all comes down to the monthly payment. Loyalty, brand preference — those often take a back seat to affordability and necessity.”
Jackie Charniga covers General Motors for the Free Press. Reach her at jcharniga@freepress.com.
