Connecticut car dealers say President Trump’s 25% tariffs on imported autos and auto parts will definitely cause prices to increase, but how much is yet to be seen.
Those looking to buy a car could soon be paying more at their dealership of choice following a Trump Administration announcement of a 25% tariff on imported cars and auto parts.
The president's goal is to bring back manufacturing jobs to the United States.
But nearly half of all vehicles sold in America are imported, including the Audi Q5, Ford Bronco Sport, and Honda Fit to name a few.
For dealers here in Connecticut, there are a lot of questions. Most of the next steps come from the manufacturers themselves according to some dealers.
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“We have to be flexible because we don’t know exactly whats going to happen,” said Joe Barone, General Manager of Gengras Volvo and Operations Manager at Gengras Auto group.
The 25% Tariff announcement has left manufacturers offering some guidance to dealers who are fielding questions from consumers. Questions that are coming through their doors already.
“We are trying to be respectful in conversations with guests when we are having them and not create any fear tactic,” said Barone.
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Gengras Volvo in East Hartford said the bottom line is that consumers can likely anticipate the prices of new cars to increase. By how much and how fast is still unclear.
“Those are going to be correlated, so as the cost of vehicles go up, the price for the vehicle will also go up,” said Barone.
The idea according to the White House, is to bring back manufacturing to the U.S.
“A lot of companies are going to be in great shape, because they have already built their plant, but their plants are under-utilized so they will be able to expand them quickly and inexpensively,” President Trump said on following the announcement on Wednesday.
The tariffs are set to go into effect on April 3.
But car companies have been outsourcing for decades, to keep the cost of building a car down. Something experts say can’t be undone overnight.
“They built a very vast network of parts that it will be difficult to bring all that back,” said Patrice Luoma, a professor of Entrepreneurship and Strategy at Quinnipiac University.
She understands the idea is to bring back manufacturing to the U.S. but anticipates it will turn people off from buying new vehicles and steer them toward the used car market.
“You can’t undo 30 years of outsourcing in a year or two,” said Luoma. “I think used cars are going to be really attractive going forward.”
She also wonders if the tariffs will make it across the finish line, citing previous tariff announcements that later were delayed or rolled back following further conversations with foreign leaders. She notes the automobile industry is powerful and will likely be in conversations with White House officials in the coming weeks.
Many foreign-based car companies have also made investments in recent years, including Volvo, which opened a manufacturing plant in South Carolina. But that plant only makes certain models right now, and parts still come from all over the globe. Those would be subject to the tariff.
“Different models are going to be impacted differently,” said Barone.
That has many dealers with questions and in a wait-and-see approach for the true impact.
“If you are looking for a car, now might be the time because things aren’t going to go down, they are going to go up,” said Barone.
