Kristin Dziczek, an auto policy advisor for the Federal Reserve Bank of Chicago, described 2025 as a “shock absorber” year in which trade policy jumped to the foreground and forced the industry to rewire production, content, and pricing strategy at speed.
The details: Speaking at the Detroit Branch’s 32nd Annual Automotive Insights Symposium, Dziczek said that as new tariffs, many automakers pulled their guidance and paused investments. By the third quarter, conditions stabilized enough for plans to resume and for several clear patterns to emerge across tariffs, trade flows, and pricing.
Through January to October 2025, the U.S. government collected just over $200 billion from import tariffs.
Tariff compliance has also increased, with the share of U.S. sales built in the U.S. rising from 51% to 57%.
Despite expectations of bigger price shocks, she said that even though tariffs per vehicle were up 552% year-over-year as of October, the average vehicle transaction price was up only 2.1%.
“Automakers are clearly absorbing the bulk of the recent shocks,” Dziczek said.
Why it matters: OEMs are taking a huge step-up in per-vehicle tariff cost and choosing to defend volume and affordability through content cuts, supply-chain moves, and destination fees instead of visible MSRP jumps. That strategy keeps shoppers in the market but makes lineups, equipment, and programs more volatile on the ground.
OUTSMART THE CAR MARKET IN 5 MINUTES A WEEK
Get insights trusted by 55,000+ car dealers. Free, fast, and built for automotive leaders.
Between the lines: There are multiple reasons the industry has been more resilient amid tariff changes, from pre-tariff inventories to federal relief measures, explained Dziczek.
Few countries retaliated against the U.S. for tariff increases, so costs produced in global markets were less impacted.
Automakers potentially delayed price increases while waiting to see where tariffs and exemptions would settle out.
Once tariffs were clear, carmakers moved to readjust supply chains, dropping some imported vehicles and scaling back import volumes.
They de-contented base models and eliminated standard features, moving those to paid options.
Automakers tweaked purchase and lease incentive programs and raised destination charges and other fees.
There has been margin compression, cost cutting, and cost absorption, including spreading U.S. tariff costs across global portfolios.
“The feds provided some relief, acknowledging that it will take some time for supply chains to adjust, by standing up the import adjustment offset program,” said Dziczek. “That offsets 3.75% of the aggregate manufacturer’s suggested retail price of vehicles produced in the U.S. And that program runs for five years.”
Looking forward: Dziczek predicted AI and automation will keep reshaping factories and vehicles and trade will return to center stage as the U.S.-Mexico-Canada Agreement (USMCA) review begins in June.
Bottom line: Tariffs are now a structural cost in the system, and automakers are choosing to absorb most of that hit rather than pass it straight through to the sticker.
A quick word from our partner
ChatGPT can write emails, plan trips, even tell jokes…
But it can’t tell you which VINs are at risk of sitting too long, how your dealer performs against your competition, or how to improve your VDPs.
That’s where LotGPT comes in. It's the only chatbot built exclusively for car dealers. It knows your market, dealership and inventory.
Fueled by Lotlinx’s decades of VIN and Shopper data, plus your live inventory, Google Analytics and CRM, it delivers relevant answers and guidance to help you sell cars faster and more profitably.
LotGPT is free for dealers, but invite-only.
