Rising car prices driven by the Trump administration’s 25% tariffs on the auto industry are making shoppers think twice about upgrading their vehicles.
Tighter budgets across the U.S. and Canada could result in 1.8 million fewer cars sold this year alone, a recent Reuters report estimates.
Reuters reports that the data comes from a forecast by Detroit-based automotive advisory firm Telemetry. In their analysis, Telemetry projects that if the 25% tariffs remain in place through 2035, annual passenger vehicle sales in the U.S. and Canada could drop by seven million units.
By comparison, their no-tariff scenario forecasts 24.6 million annual sales, highlighting the dramatic impact prolonged trade tensions could have on the auto market.
Although the tariffs have only been in effect for a short time, the impact has been immediate. BMW, for instance, temporarily stopped shipments of certain SUV models from its South Carolina plant to China in response to retaliatory tariffs, while also reviewing its global production strategy.
At the same time, other automakers have increased domestic production of select models to avoid extra costs, while putting a pause on assembling vehicles in countries affected by the trade conflict.
Automakers are taking varied approaches to address shifting prices. Ford, for example, is extending its employee discount to all customers, but only until June 2. Meanwhile, brands like Hyundai have pledged to hold off on price hikes for now.
Read: Ford Prices Could Skyrocket Thanks to Trump’s Tariffs
However, that move comes with trade-offs: Hyundai has also ended its complimentary maintenance program, signaling that cost-cutting measures are still in play behind the scenes, MSN said.
