DETROIT -- (WWJ) Car makers have been dealing with a complex, ever changing, set of tariffs for nearly six months now. Back in April, when the first tariffs were announced, there were predictions of sticker price increases in the thousands of dollars.
So far, the reality has been different.
“We absolutely have not seen the price increases that we expected to have with tariffs early on,” says Stephanie Brinley, principal analyst with S and P Global Mobility. “Largely this is a result of the chaos that we’ve had over the last couple of months.
Brinley has authored a report looking at tariffs and their impact on carmakers. You can access it here.
She says, so far, price increases on individual vehicles have been moderate, and it’s been hard to tell how much is due to tariffs, and how much is due to added content on vehicles.
“All of the negotiations back and forth have just kept the uncertainty alive in situations. So, it makes it difficult to plan out and assess what your cost is going to be.”
Many trade deals have yet to be negotiated. The USMCA trade agreement involving the U.S., Canada and Mexico is expected to be revisited. Brinley says there are a lof of moving parts that carmakers have to deal with.
There’s also competition.
“If you, as an automaker, increase your prices and your competitor doesn’t, then you’ve got an automatic disadvantage.”
Car companies say that tariffs have cost them billions of dollars. But, for the most part, they are still making money. The sales environment remains strong. They are also saving a lot of money due to changes in environmental regulations.
Brinley says we are also seeing companies sourcing more production to the U.S.
But while the prices increases have been small, Brinley says no vehicle has escaped a cost increase. While the exact impact of those cost increases remains unclear, she feels that over the long term, this will result in higher prices for consumers.
“Prices have to come up at some point, because the tariff cost is too much for a carmaker to perpetually absorb.”