White House confirms possible adjustments to auto tariffs, raising more questions than answers

Word has it President Donald Trump might flip the script on some of the auto tariffs—though it’s uncertain at this point on how it could all play out for the industry.  

The details: According to recent reports, the Trump Administration is considering exemptions from some auto tariffs previously—which the White House confirmed on Wednesday.

• A Financial Times report indicates that Trump is considering nixing the levies on auto parts from China—which would be separate from the current 25% tariffs on imported vehicles, as well as 25% tariffs on imported auto parts that is scheduled to take effect by May 3.

• The President also threw out the idea Wednesday of turning the heat up on Canada (as if the tensions aren’t already hot enough), by raising the 25% levies on cars imported to the U.S. from the neighboring country.      

Why it matters: News that President Trump is considering adjusting auto tariffs is a reminder that staying ahead in the car business right now is like a basketball team’s “big man” finding out, right before Game 7 of a tied playoff series, that he has to guard Steph Curry. 

Looking ahead: Erin Keating, an executive analyst with Cox Automotive, tells CDG that navigating the indecisions associated with the tariffs can be tricky, requiring companies to run one scenario after another. However, she does offer up some advice on how to navigate the “what-ifs” in a more sustainable way.

• Assess your strengths and lean into them. If you have a decent supply in a competitive model, don't be afraid to push customers to cross-shop from makes or models you don't traditionally see as competitors. 

• Embrace EVs, given that there is more days' supply there, and the IRA credits have not gone away yet. An EV on your lot is likely one of the more tech-forward and more affordable models you have; move them. 

• Be a resource for customers, don't scare them into a purchase, rather help them make the right decision. Strengthen your F&I programs; be transparent; look for ways to work with subprime customers.

Keating also says it’s a great time to cater to customers who might be inclined to get their vehicles serviced or repaired work, as they look to hold off on a new or used vehicle purchase. 

Bottom line: The auto industry has always been known for its resilience. The dynamics surrounding Trump’s tariffs are certainly testing that idea in new and different ways. However, the ability to be able to adjust accordingly is not just important; it could prove to be a determining factor in what businesses continue to remain viable in automotive.  

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