Tariffs on imported automotive parts are coming too, but not until May. (That’s because determining non-U.S. content of auto parts is pretty hard, so we’ll need a new government system to make the determination. And that’ll take time.)
With so many variables in play — exact scope, duration, inventory levels, OEM exposures, dealer behavior — there is no single model to forecast actual price increases on the ground.
I gathered perspective on how this could play out from the great seminars and conversations at the Conference of Automotive Remarketing two weeks ago and collating public statements from Cox Automotive and S&P Global Mobility.
Analysts are broadly predicting price increases of $3,000 to $6,000 on new, tariff-affected vehicles. But translating that into Munroney sticker markups won’t be clean, with vehicle-by-vehicle adjustments.
Take small cars, which are mostly built abroad while SUVs and pickups are built in the U.S.: It doesn’t make sense for an automaker’s tariff-subjected, foreign-made compact car to be priced higher than the same automaker’s domestic mid-sized sedan.
Applying the 25% tariff to that imported compact sedan adds $5,000 to a $20,000 car, a massive jump in relative terms. But on a $50,000 SUV, that same 25% adds $12,500 — still a lot, but that buyer pool has more elasticity.
As a reaction, OEMs are more likely to spread price increases across their entire portfolio, including domestically built models, to maintain product hierarchy and sales momentum.
This could have a spill-off effect industrywide — as demand shifts, prices could rise on non-tariffed, domestically built vehicles from other OEMs.
So fleet and retail pricing could climb across the board, even if you’re buying vehicles built in North America.
Spreading the Costs
How do automakers balance these forces? They absorb some of the cost on lower-margin vehicles, raise prices on higher-end models where buyers have more wiggle room, shift production to lower-tariff countries (if they can), and trim features quietly to reduce manufacturing costs.
They could actually cut models entirely if the economics don’t work, as Jonathan Smoke, Cox Automotive’s chief economist, said in Cox’s Q1 market recap this week.
Used Market: The Ripple Effect Will Hit Fast
Used prices have come down from pandemic highs, but they remain well above historical norms. Cox Automotive reported that used retail prices declined in late 2024, but they’re still roughly 27% higher than 2019 levels.
Tariffs on new vehicles almost certainly mean upward pressure on used vehicle prices. Cox now predicts that wholesale values could rise 2.2% to 2.8% this year. This will help fleets balance ownership costs but will drive continued market uncertainty.
According to Black Book, the supply of used compact cars was already down to just 39 days in March, the lowest since April 2021. Supply remains the core issue. Lease returns are down, and commercial fleet cycling has slowed.
Both Cox and S&P project that in this present tariff scenario vehicle production in North America will decrease by 20,000 vehicles per day. A prolonged decrease would affect the used market in the same way that the 2022 supply chain crunch is constricting lease returns today.
Tariffs on Parts Will Drive Up Repair Costs
Oh yeah, parts. Tariffs on foreign-made components in new vehicles (engines, transmissions, batteries, sensors, etc.) will be factored into new vehicle costs in ways we’ll never see.
However, fleets will see higher repair and replacement bills on foreign-made aftermarket parts like replacement fenders, bumpers, sensors, lights, batteries, brakes, windshields, and mirrors.
Many are built from global inputs involving plastics, electronics, and subassemblies from dozens of countries. Establishing origin data at scale will be complicated. Until then, pricing uncertainty is guaranteed.
A basic bumper tap can trigger a $2,000 repair due to sensor damage. Add a parts tariff, and that could double.
Compounding the problem for fleets? Avoiding a fleet refresh will mean higher maintenance bills on aging vehicles.
And Now, Recession Enters the Chat
Here’s where it gets complicated. If a recession hits (unthinkable in December, very thinkable now), everything we just talked about will be thrown into flux.
Demand for new and used vehicles will drop, buyers will pull back, credit will tighten, and repossessions and lease returns will increase. So, if tariffs push prices up and a recession pushes demand down, what happens?
It depends. A mild recession plus a trade war could produce flat or slightly elevated prices. With a deep recession, downward pressure wins, and prices fall — even with trade disruption. It’s a tug-of-war.
So, What Should Fleet Managers Do Now?
Here’s the shortlist:
- Audit your exposure: How much of your fleet (and your parts supply chain) is reliant on imports?
- Talk to your OEM reps: Are your present orders that haven’t yet been delivered price protected?
- Lock in any unplanned orders now: When tariffs take effect, pricing could shift overnight.
- Model your TCO under different scenarios: Best-case, mid-range, or worst-case.
- Watch used supply closely: 1–3-year-old vehicles are holding their values. Is this the time to sell into a buoyant wholesale market? If buying used makes sense for your fleet, consider pulling the trigger now before the market heats up further.
But Is Clarity Even the Goal?
Everyone thrives on predictability. As painful as tariffs’ effects might be, understanding their scope and duration will allow smart fleet operators to strategize accordingly.
But is this the “for certain” time? In his briefing this week announcing the tariffs, Trump said they are “permanent” and will remain in place throughout his presidency. Oh, if only we could count on that certainty.
The most concerning thought isn’t just the volatility or the pricing pressure. If the market can be moved with a headline alone, clarity might not be the goal. Uncertainty may be the point.
