Massachusetts businessman Ernie Boch Jr. believes the anticipation leading up to a new 25% tariff on cars and parts shipped to the U.S. is having a direct impact on sales.
The automotive tariff is set to take effect on Wednesday, April 2, and will begin to be collected on Thursday, April 3.
Tariffs on foreign-made parts will start a month later.
The tariffs are expected to drive up car prices and maintenance costs.
Boch Jr., who runs two car dealerships and imports Subaru vehicles to the six New England states, is convinced car buyers are trying to get ahead of it.
“The first quarter of the automotive industry for this year will be one of the biggest ever recorded,” he said. “The vehicle’s on the lot. It has no tariffs. Why not buy it?”
The tariffs will impact prices of foreign cars and American cars with foreign parts.
Automakers that import higher percentage of vehicles and auto parts will be affected the most.
According to senior auto analyst John Murphy, Toyota, Hyundai, and Nissan import more than 50% of their vehicles, General Motors imports about 49% percent of its vehicles, and Ford imports about 20% of its vehicles.
“All these importers, if they were able to, were importing as early as possible to avoid those tariffs,” said Ben Modesitt with OEC Group.
The Trump administration projects the tax will generate $100 billion dollars a year, but auto makers worry higher prices for buyers will mean lower profits.
“President Trump should be doing everything he can to lower costs to lower prices for families across the country who are feeling the squeeze right now,” said Massachusetts Governor Maura Healey.
Governor Healey criticized President Trump’s plan to roll out a set of tariffs Wednesday, including reciprocal tariffs on other countries.
Trump has called it “Liberation Day”.
“We’re going to charge countries for doing business in our country and taking jobs, taking our wealth, taking so much out of our country,” he said before signing an executive order last week.
The tax to the cost of new cars
The 25% automotive tariff is also expected to drive up the cost of new cars and repairing old ones.
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