On Wednesday, President Donald Trump announced sweeping tariffs across the globe in response to what he called an economic emergency.
The announcement also comes with a 25 percent tariff on all foreign cars, starting on Thursday. In May, that same rule is expected to apply to car parts as well.
But what does this all mean for consumers and car dealerships in Connecticut?
“There’s approximately 260 new car dealers in our state. We represent 14,000 employees, direct employees. We are responsible for almost $1 billion in taxes, which is approximately 18% of all retail taxes (that) are collected in the state and we sell a lot of cars,” Jeff Aiosa, of The Connecticut Automotive Retailers Association, said.
Aiosa also owns Mercedes-Benz of New London. He said tariffs will likely have an impact on inventory and prices.
Aiosa said that increase can be anywhere from $4,000 to $15,000, which would likely be for a luxury car.
Aiosa said about 16 million cars are sold in the U.S. every year.
“It’s going to be shared pain and what is the disbursement of that, we don’t know. Will the dealer be asked to shoulder some of it? Will it be passed on entirely to the consumer? If it is, we’re going to see that $16 million that I made reference to in annual sales be depleted by perhaps well more than $1 million, could be in the millions, we don’t know,” Aiosa said.
As for when customers can expect to see the impact of the tariffs, Aiosa said it could take a couple of months.
“This is not necessarily the pandemic 2.0. But, as you know in the pandemic because of the chip shortages, we experienced high demand, low supply. The industry typically runs somewhere between 60 and 90 days’ supply. We were at zero supply, effectively in the pandemic. It’s taken years to build it back up to where we are and now it’s a one, two punch,” Aiosa said.
And with prices going up, dealerships may have to downsize.
“Hard to make business plans or decisions based on the future when we don’t know for certain what’s going to happen. But there is a sense of sweating the assets, right? Belt tightening, being as lean as we could be, because we do know that there is going to be a drop off in, in revenue going forward,” Aiosa said.
