Spurred by the specter of rising automotive costs due to tariffs, Ricardo Rinconeño of Orland Park purchased a 2025 Chevrolet Equinox final Friday.
Rinconeño mentioned he and his spouse, Nicole, had been contemplating changing her 2015 automotive and the specter of tariffs spurred them into motion.
“I mentioned, ‘Why wait? We don’t know what’s going to occur.’ If it wasn’t for the tariffs, I in all probability would have waited one other 12 months,” he mentioned.
Rinconeño isn’t alone. Consumers have been dashing to dealerships in hopes of snagging a automotive at a worth they will afford earlier than any tariff-fueled worth hikes push them out of the market. However automotive sellers within the Chicago space burdened that any worth will increase from tariffs will seemingly have an effect on stock slated to reach within the coming months — not automobiles already of their showrooms or on their tons.
On Wednesday, President Donald Trump introduced 25% tariffs on all automobiles assembled exterior the U.S. The tariffs may even apply to imported auto components beginning Might 3, which is able to add to the price of automobiles made within the U.S., in addition to auto repairs. The tariffs had been a part of a lot bigger transfer declaring taxes on imports from all international locations.
Whereas automobiles had been as soon as made in the identical nation as their company headquarters, most automakers now have world manufacturing networks. Automobile components, like a battery pack for an American electrical automobile, will be made within the U.S. however shipped to an meeting manufacturing facility overseas the place the completed automotive is then shipped again into the U.S. — a course of that may now be topic to a number of taxes.
The Chevrolet Equinox that Rinconeño purchased is made by Detroit-based Common Motors, however the automobile is assembled in Mexico, and 49% of its components are from that nation.
Whereas a partial exemption is being made for automobiles made in Mexico and Canada due to the U.S. free commerce settlement with these international locations, Common Motors would nonetheless should pay a tariff if parts had been made in different international locations.
Overseas automakers like Toyota and BMW will see greater taxes. BMW, as soon as primarily made in Germany, now’s manufactured in 15 international locations, together with Germany, China, South Africa and the US.
What this implies for a shopper is automotive costs affected by tariffs will fluctuate broadly based mostly on the automaker and the mannequin. The Finances Lab at Yale College estimated Trump’s auto tariffs will increase costs by 2.3% within the brief run, “a lack of buying energy of $3,800 per family on common.”
For now, folks like Katie Lopez, a 48-year-old social employee from Mount Greenwood, are on a mission to purchase a automotive earlier than any tariffs trigger potential worth will increase.
“Now the tariffs are coming. My aim is to have a brand new automotive by the tip of the day on Saturday,” Lopez mentioned.
Sellers throughout the Chicago space have been getting ready the final couple of months by rising their stock earlier than tariffs have an effect on pricing.
“We’re sitting on 1,300 new automobiles with one other 300-400 inbound which can be pre-tariff. So, we’re not going to really feel any results for a couple of months,” Enzo Costa, director of gross sales at Patrick Auto Group, mentioned. The family-owned firm has eight dealerships throughout the Chicago space that promote BMW, Mini, Land Rover, Jaguar, Volvo, Cadillac, Genesis and Hyundai.
Costa mentioned the specter of tariffs is one thing his gross sales crew is utilizing to spur clients into motion — and it’s working.
“Saturday, we had a file day,” he mentioned. “We offered over 80 automobiles. It was 100% as a result of they needed to beat the tariffs.”
Automakers lately reported sturdy gross sales this 12 months, with most seeing double-digit features. For instance, Chevrolet gross sales rose 14% throughout the first quarter, making it the model’s finest quarter since 2019.
Automobile firms offered almost 1.6 million automobiles within the U.S. in March, up 13.6%. Whole gross sales for the primary quarter had been greater than 3.9 million automobiles, Motorintelligence.com mentioned Tuesday.
However automakers are nonetheless planning to take successful. Stellantis, which introduced plans in January to reopen its Belvidere meeting plant, mentioned Thursday it could pause manufacturing at vegetation in Canada and Mexico due to the brand new spherical of tariffs. The pause means supporting vegetation in Michigan and Indiana will probably be idle, with 900 staff quickly laid off for about two weeks. The automaker owns the automotive manufacturers Jeep and Ram.
Costa, of Patrick Auto Group, mentioned whereas the dealership is not going to be affected proper now, he’s apprehensive that if tariffs keep in place for an prolonged interval, costs will rise.
“The influence will probably be on automobiles which can be being produced 1743876950. There’s nothing actually to fret about till the summer season months,” he mentioned.
Economist Mary Beautiful, senior fellow on the Peterson Institute for Worldwide Economics, mentioned extra households will probably be priced out of the brand new automotive market — the place costs already common about $49,000 — and should hold on to growing older automobiles.
“We’re going to see lowered alternative. … These sorts of taxes fall extra closely on the center and dealing class,’’ Beautiful mentioned.
Sam Alfano, used automotive supervisor at Al Piemonte Nissan in Melrose Park, mentioned Nissan is making an attempt to additional inspire consumers by providing $500 to $1,750 off the sticker worth.
On Thursday, Ford Motor Co. introduced a brand new promotion providing worker pricing on choose 2024 and 2025 automobiles. “We perceive that these are unsure occasions for a lot of Individuals. Whether or not it’s navigating the complexities of a altering economic system or just needing a dependable automobile for your loved ones, we need to assist,” Ford mentioned in a information launch.
Alfano mentioned customers ought to know that though the tariffs went into impact Thursday, the price of automobiles at dealerships now is not going to be affected.
“The automobiles we have now, these are the costs. They gained’t improve as a result of they’re already right here,” Alfano mentioned.
Trump has mentioned one of many targets of his sweeping tariffs is to push firms to convey manufacturing again to the U.S. However firms, together with automakers, have vegetation world wide to accommodate world gross sales and preserve aggressive costs, and it might take years for firms to design, construct and open new U.S. factories.
Jeremy Gleason, basic supervisor of McGrath Subaru Evanston in Skokie, mentioned whereas he expects a bump in gross sales for the subsequent couple of months, he worries that automakers will gradual abroad manufacturing.
“Even when these producers determine to take the hit for some time, they’re going to reel in manufacturing. I can’t see them going full on — transport as many automobiles as they will — in the event that they’re going to take the hit for tariffs,” he mentioned. “We’re going to be low on automobiles once more.”
Costa mentioned producers have advised him that costs will probably be locked via April. After that, if tariffs are nonetheless in place, customers could really feel the influence.
“We’re speaking a 25% tariff on components, and that’s going to hit immediately,” he mentioned. “All of us are assuming the automobiles will probably be raised up in worth by 25%.”
Contributing: AP
