Driving home the impact of auto tariffs

THE AUTO INDUSTRY is more than just the business of building cars and trucks. It is the business of selling them. It is also everyone who buys them. The Pennsylvania Department of Transportation lists 12.1 million vehicles registered. Trade group Alliance for Automotive Innovation says total car sales in the Keystone State in 2022 topped $46 billion. Tax revenue alone hits $1.5 billion for new cars and $79.4 million for used. That’s a significant amount of money circulating through Pennsylvania based on car sales, both in and around communities and into the state’s coffers.

So what will tariffs do? A 25% tariff on imported vehicles is planned to take effect April 3. The tariffs are paid by the importer. Just like any increased business expense, it becomes wrapped into the final cost to customers. That means a new imported car — and half of cars in the U.S. are imports — is likely to cost $4,000 to $12,000 more in the near future. This makes used cars suddenly shiny and attractive. We know what that looks like. Used cars became more scarce and increased in cost during the covid-19 pandemic. Dealers like Barry Freger, co-owner of Pinnacle Auto Sales in Jeannette, are stocking up on as many good, late-model vehicles as they can in anticipation of demand. “The prices are going to suffer, but so is the supply chain,” said David Carey of Harrison while checking out cars at Cochran Chrysler Dodge Jeep Ram Allegheny Valley. “You don’t know what … will come next, and that will impact manufacturing across the globe. Every time you need a part, you don’t know how much it’s gonna cost.” That means everyone who needs a car to get to work or drive the kids to school or get to a doctor’s appointment needs to think of the impact. It also contributes to a trickle down on other costs. Just like higher prices for eggs means higher prices for anything that uses eggs, the tariff on vehicles is likely to mean higher costs down the road on any business that relies on vehicles. That could mean taxi and Uber rides, pizza and grocery deliveries. Think everything from car rentals on vacation to every business that pays mileage to employees putting wear and tear on their own vehicles for work reasons. That isn’t to say tariffs should be demonized. There is a time and place for them. They should be used in a targeted, appropriate manner with an eye toward defending American manufacturing, but that must include a broad view of the impact beyond the obvious. Tariffs are complicated. Applying them to the auto industry stretches that complication to something that can impact every wallet.