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Impending auto tariffs have some Detroit shoppers racing to beat price increases

Louis Aguilar, The Detroit News on

Published in Automotive News

DETROIT — Maybe it's the eye of the storm or maybe it's another false alarm, but sales and customer traffic were brisk early Saturday afternoon at Ray Laethem Buick GMC dealership in Detroit.

General sales manager Che Shaydak knew the reason for the uptick: "It's the potential tariffs. People are scared. They don't know if in the very near future prices may go up and frankly, we can only tell them this is a situation that's out of our hands."

President Donald Trump said Wednesday his administration will impose 25% tariffs on car parts coming into the U.S., in addition to fully assembled vehicles. The tariffs on vehicles are set to take effect Thursday, while the tariffs on parts are set to go into effect no later than May 3.

Trump’s auto tariffs could send the cost of new vehicles soaring, according to dealers and industry experts. The price hike would likely mean a surge in used vehicle purchases, dealers and industry analysts contend.

So, in this potential waiting period, the fear of the unknown future is why the Laethem Buick GMC dealership sold five new cars within two hours of opening on Saturday, Shaydak said. Traffic was also good Saturday for used cars, too.

"It's been like this more or less for a month, ever since the talk of tariffs has come up," Shaydak said.

The potential impact of the auto tariffs is why Christina Rieger decided to seal the deal on Saturday to buy a GMC Terrian, a purchase she had been mulling over for more a year.

"I don't have an opinion one way or another on tariffs," the Clinton Township resident said. "I'm not sure how long term they're going to impact us, but I do think short term that they are." So, when Trump announced the tariffs earlier this week, Rieger went online to begin buying her new Terrian.

"I just figured it's better for me to buy now versus waiting another year," Rieger said.

Not far from the Laetham dealership, Tamekia Gill was eyeing used cars in the lot at the Bob Maxey Lincoln pre-owned site in Detroit. The dealership was closed Saturday but that suited Gill just fine because the Detroit resident said she's still trying to convince her husband they need to act soon.

 

"It's all this talk of tariffs again — I guess I should say again and again, " Gill said. The Detroit couple are looking to replace their second car, a 2016 Ford Taurus with over 150,000 miles, that her husband mainly drives.

"I think we should do it now because if prices do jump up, we may not be able to afford a good used car," she said. She's hoping to buy a used car with low mileage for around $20,000, she said. "Believe or not, it's not that easy to find a used car like that for that price," she said.

Gill said her husband wants to put off buying for a "cynical reason."

"He thinks a lot of people are going to lose their jobs and we can get a bargain from someone who needs to sell quick because of their situation," she said.

The Gills are not alone in the views of the economy. On Friday, the final version of the University of Michigan’s Survey of Consumers showed a reading of 57.0 for the month, down 11.9% from February and 28.2% from a year ago.

“Overall, consumers perceive a tremendous amount of uncertainty in the economy — policy uncertainty, market uncertainty, general economic uncertainty, among others,” said economist Joanne Hsu, director of the University of Michigan’s Surveys of Consumers, in a press statement.

About 44% of consumers in the monthly survey spontaneously mentioned tariffs during interviews, up from 40% in February.

“The fact that expectations worsened across the board suggests that consumers perceive more downside than upside risk for the foreseeable future; these views will likely dampen consumers’ willingness to spend or make investments," Hsu said.

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