(WWJ) Tariffs have now been a fact of life for carmakers for more than a year. But there has been no letup in the ongoing impact those carmakers feel. In addition to tariffs, carmakers are dealing with a myriad of issues one quarter into 2026.
“We continue to see churn,” says Steve Britt, who directs costumes and international trade at PWC Consulting. “We continue to see change. We don’t expect that to let up.”
And that churn is not going to let up on the consumer, either.
“Vehicle prices are going up,” says Cox Automotive executive analyst Erin Keating. “The question is how much and how fast.”
For the most part consumers have only seen moderate price increases because of tariffs. Keating says that can’t go on forever.
“The total burden on automakers and suppliers in 2025 was estimated to be 35 billion dollars. OEMs preserved those costs at launch to preserve volume and protect market share. But that was never sustainable.”
Car makers have made small moves to pass on their higher costs, in the form of less discounting, and higher delivery fees. They have also seen help from changing emission regulations, which reduce the amount of money they need to spend on compliance.
Still, 35 billion dollars is a lot to absorb.
“The absorption phase is definitely over,” says Keating. “OEM’s are now in pass through mode.”
Higher prices for vehicles, along with higher prices for gasoline, and the uncertainty of a war in the middle east would ordinarily make car buyers nervous. But JD Power is not backing off on its relatively optimistic annual sales forecast. They expect 16.3 million vehicles to be sold this year, pretty close to the number in 2025.
“The global auto industry has evolved significantly over the past few years, proving its agility and resilience in response to market shocks,” says Thomas King, president JD Power OEM solutions. “This year is no different.”
King says we are in a riskier market. But there are still a lot of people who have the money and are willing to buy a new car or truck.
“There is no doubt the current situation in the Middle East will make things more difficult to predict over the near-term, and longer term risks to auto sales are material,” says King. “But, the fundamentals are strong for a solid year in 2026.”
And the “churn” mentioned by PWC’s Steve Britt is one of those risks. The Supreme Court decision striking down some Trump administration tariffs has created new confusion over who may be able to get a refund on earlier tariffs, and what new tariffs may be implemented. That could have both direct and indirect impacts on carmakers.
Also up in the air, the renegotiation of the USMCA free trade agreement involving the U.S., Canada and Mexico. That could significantly re-write trade rules on an area that had once been thought of as one region, but is now evolving into three distinct markets.
“We expect more sectoral tariffs,” says Britt. “More country specific tariffs, and effectively being done under a different mechanism.”
One of the reasons cited for the tariffs is to stimulate more production in the United States. We’ve seen a lot of announcements to that effect. And, says Cox Automotive’s Erin Keating, this could impact the traditional manufacturing paradigm.
“On the positive side, more manufacturers are announcing US made vehicles for export.”
