Michigan auto expert speaks on potential impact of tariffs on car prices
(CBS DETROIT) — Automotive and economic policy experts said they expect tariffs to raise the price of goods and services coming into the U.S. from other countries, but they question whether the tariffs will stick or if the Trump administration is using them as a negotiating tactic.
"Every single automaker builds cars and components overseas. Even if they make cars in the U.S., Ford imports a lot of vehicles and components, so the price of all that it would go up significantly," said John McElroy with Autotune.
McElroy said President Trump's announcement to increase tariffs will undoubtedly impact sales prices.
"You know, the estimate is based on what Trump is talking about right now, the prices of all vehicles would go up by $3,000, and you know, it's a pretty common rule of economics as you raise prices, sales will go down," McElroy said.
McElroy said the additional costs will most likely be paid by the consumer.
"I mean, most companies will be tempted to pass the cost of the tariff to consumers in some cases if it's a very competitive segment, they may have to eat that, but it's either going to be the companies or the consumers or some combination of them that are going to pay for this," McElroy said.
"I think what the president is trying to do is a negotiating tactic so threatening tariffs with the hope that maybe other countries will lower their tariffs. If something like that happens it would be a good thing. I mean our ideal world is that no country has any tariffs," said Jarrett Skorup, vice president for marketing and communications with the Mackinac Center for Public Policy.
Skorup said he is hopeful this is a strategy and tariffs don't become a long-term decision.
However, McElroy said he believes, in the short term, he does not expect U.S. automakers to bring more jobs stateside because it's still too costly and believes the Detroit Big Three are more likely to wait it out.
"I think automakers are just going to sit this out and see what happens," he said.
