US Auto Market Struggles Amid Tariffs and Economic Uncertainty

The US auto market is facing challenges due to rising tariffs, high prices, and economic uncertainty. After a surge in spring sales, the market slowed in June as consumers held back on purchases. President Trump's auto import tariffs have led to pricing adjustments by automakers and expectations of further disruptions.

The annualized selling rate for automobiles dropped to 15 million in June, down from 17.6 million in April. Despite a 2.5% increase in second-quarter sales compared to the previous year, analysts warn of a potential decline in production to balance supply.

US auto sales spiked early in 2025 as consumers rushed to buy vehicles before the new tariffs. The average new car cost in June was up 1% from the previous year. Rising auto prices since 2019 have been driven by supply chain issues, inflation, and not just tariffs.

Chief economist Jonathan Smoke predicts a monthly sales rate of around 15 million for the rest of 2025. Affordability concerns have impacted consumer behavior, with economic uncertainty surpassing high interest rates as a deterrent to car purchases.

Car prices have risen, with the average cost reaching $48,799 in June. Automakers are cautious about price increases and have adjusted incentives and model prices. Monthly car payments hit a record $747 in June, leading more buyers to opt for longer loan terms.

The June sales slowdown is attributed to a post-surge decline. Analysts expect consumers to bear 80% of the tariff costs, potentially adding up to $2,000 per car. Tariffs on imported vehicles and parts have impacted prices, with potential supply chain disruptions and affordability issues.

The Trump administration's 25% tariffs on imported vehicles and auto parts have affected the market, with exemptions ending and tariffs applying broadly. US-made vehicles receive rebates, and a UK trade deal reduced tariffs on British cars. Analysts warn of price increases and supply chain challenges.

According to the source: New York Post.