US car sales witness biggest spike in 2 years
What's the story
Car sales in the United States have witnessed a major spike, the largest since January 2023. According to data from the Census Bureau, auto sales increased by 1.4% in March. The spike is largely due to a 5.7% increase in seasonally adjusted auto sales, as consumers rushed to make large purchases in anticipation of President Donald Trump's tariff measures, which went into effect on April 3.
Tariff details
Trump's tariffs and their potential impact
Trump slapped a hefty duty on all imported foreign-made cars, which is likely to have a major impact on the industry. The extra cost would depend on the make and model of the vehicle. Michigan-based economic consultancy Anderson Economic Group said these new tariffs could increase most car prices by $4,000 to $10,000, and raise electric vehicle costs by about $12,000.
Expert opinions
Experts weigh in on the surge
James Knightley, Chief International Economist at banking corporation ING, said "Savvy consumers are coming to stores ready to make big purchases to avoid the effects of tariffs that are expected to drive up costs." However, economists have warned that this spike in sales could result in a sharp decline in consumer spending later this year, if the impact of tariffs starts hitting shoppers.
Manufacturer challenges
Trump's tariffs pose challenges for car manufacturers
President Trump's fast-evolving trade policy has raised difficult questions for carmakers. Although he has stepped back from some of his harshest tariffs, carmakers remain responsible for the 25% levies on auto imports which came into effect on April 3. However, the effect of this levy has been somewhat subdued as automakers continue to sell vehicles from their stock.