With Auto Tariffs on Hold, Is Now the Time to Buy a Car?
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At KPMG, we make the difference by creating value, like developing strategic insights that help drive M&A success or embedding AI solutions into your business to sustain competitive advantage. KPMG, make the difference. Learn more at www.kpmg.us slash insights. Here's your money briefing for Friday, March 14th. I'm Julia Carpenter for The Wall Street Journal.

Last week, President Trump modified his plans for auto tariffs that affect vehicles and car parts imported from over the border. During this interim period between now and April 2nd, this makes it much more favorable for our American car manufacturers. That has car shoppers wondering, what happens now?

So no one's exactly sure how to navigate this, especially with these ups and downs. So this roller coaster of will they or won't they tariffs is extremely difficult for all levels of players in the industry to plan around. We'll talk with WSJ reporter Chris Otts about how shoppers can approach buying a car in the meantime. That's after the break.

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The auto industry won't see tariffs for vehicles and car parts imported from Mexico and Canada until at least April. But in the meantime, what does that mean for automakers, parts suppliers, and car shoppers? Wall Street Journal reporter Chris Otts joins me to talk more. Okay, Chris, we have this 30-day pause on the tariffs affecting cars and many auto parts coming from across the border. What are analysts saying we can expect during this period before tariffs unfreeze again?

Well, there's a lot of uncertainty about when these tariffs are coming back, if they are coming back. And it's important to note, just to clarify, so what's happened here is Trump briefly imposed a 25% tariff on things coming over the border from Canada and Mexico. And then he quickly did a little carve out for the auto industry, which was then expanded to everything, which is that

If your car part, your vehicle, or anything else that you're importing from Canada or Mexico complies with the USMCA, which is his free trade agreement, then the tariff is paused, this new 25%, for a month until early April, and we figure out where this ultimately lands.

Your story features one auto dealer who works with managers at a dozen dealerships. What did he have to say about the news? He was talking about how he was approached by a customer recently who's got, you know, a vehicle that's coming off lease in September and wants to

was wondering, what do I do? Should I go ahead and buy a car now? That's the big question in the industry. And then you could see just internally in their meetings, there's different theories about, well, should we go ahead and get some more cars now from the factory? Or will these tariffs reduce demand, in which case,

We don't want to go ahead and accelerate our orders because then we'll be sitting on a lot of inventory and we'll have to sell it at a discount or at an unprofitable rate. It's very expensive for auto dealers to hold cars on the lot. So no one's exactly sure how to navigate this, especially with these ups and downs. So this roller coaster of what's

will they or won't they, tariffs is extremely difficult for all levels of players in the industry to plan around. I'm wondering if you can break down some of the different tariffs involved here so that someone can better understand how they'll add up and also what consumers can expect to see passed on to car prices.

I think we need a spreadsheet just to keep track of all of the Trump-related tariffs and tariff threats. So the biggest one facing the auto industry is the 25% on Canada and Mexico. It's a super integrated North American supply chain. And as the CEO of Ford said recently, 25% would blow a hole in that supply chain.

But there's several others. There's the new tariffs on Chinese products. Not very many Chinese imported vehicles into the United States, but that does definitely affect car parts. Then there's something called auto-specific tariffs that Trump has talked about, and we really have no idea what form those will take. This next question is one I'm hearing from a lot of people, and I'm sure you're seeing in the comments on your stories.

If your car needs a new part or you're looking for a new car, should you do it before the freeze ends?

It's tougher to say with parts. Many parts come from China, where Trump has dramatically raised tariffs in recent weeks by an additional 20%. So that could be a factor in any repair job. And we're starting to see hints of parts having a little bit of inflation and price increases because of those additional costs.

For finished vehicles, it's important for everyone to understand that there's about two months of cars that are already finished, sitting on the lot or in transit that dealers have that were damaged.

sold or bought and sold between dealers and car makers unaffected by these tariffs. And so now what we're talking about is in early April, do these tariffs go into effect? And so you may think that maybe we have two or three months before you might start to see the effects, right? But then it's really hard to say what the implications will be and the timing of things. Does the

imposition of new tariffs lead many people to say, you know, I'll put off that car purchase and maybe dealers are actually making deals. You and your colleagues also wrote that this tariff pause has revealed a noticeable gap, a gap between what the president wants, namely more U.S. factory work and jobs in those factories, and how quickly the auto industry can change. Can we expect to see that gap closed or even narrowed anytime soon?

You know, it takes years to build new factories. It takes months or years to repurpose existing factories to add capacity. However, there are many auto factories in the U.S. that are not being run to full capacity. And so how quickly could those just ramp back up?

By and large, this is an industry that does not turn on a dime. It works on product cycles that are three to five years long. They're planning now what they're going to make in 27, 28, 29. So it is really not something that happens overnight. That's WSJ reporter Chris Otts. And that's it for your Money Briefing. Tomorrow, we'll have our weekly markets wrap up, what's news in markets. And then we'll be back on Monday.

This episode was produced by Ariana Osprey. I'm your host, Julia Carpenter. Jessica Fenton and Michael LaValle wrote our theme music. Our supervising producer is Melanie Roy. Aisha Al-Muslim is our development producer. Scott Salloway and Chris Sinsley are our deputy editors. And Falana Patterson is the Wall Street Journal's head of news audio. Thanks for listening.

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