This post was originally published on Wards Auto
As the U.S. auto industry braces for the potential fallout from 25% tariffs on imported vehicles and parts due to begin next week, dealers face a mix of disruption, uncertainty – and opportunity. With a go-date for next week from the White House, the countdown is on as automakers and dealers prepare for what some say could be one of the most significant economic shakeups in decades.
While economists warn of price hikes, supply disruptions and slower demand, auto industry experts say dealers can still win by leaning into customer education, doubling down on used inventory and resisting the urge to panic.
“The silver lining here is real,” Jade Terreberry, senior director of strategic planning at Cox Automotive, tells WardsAuto. “We expect a short-term flutter of urgency and shopper activity – domestic, import, all of it. The dealers with their foot on the gas, using real-time data to make smart decisions, are the ones positioned to gain market share from this disruption.”
Demand Under Pressure, Inventory Risks Rise
The U.S. market has relied on decades of free trade, with 44% of new vehicles sold in 2024 imported from outside the U.S. in North America and from Europe and Asia. Applying tariffs to such a globally integrated supply chain could significantly raise costs – and shake consumer confidence.
But that hasn’t happened yet, says Terreberry, noting that dealers and auto industry insiders are more shaken than consumers. Dealers who recently attended 20 Group meetings – where small groups of dealers share confidential business information – told Terreberry that about half were “down 40% year over year and the other 50% were up by that amount.
“If that doesn’t tell us that there will be winners and losers (depending on the dealership’s actions,” she says. “(Sales outcomes) are not going to be brand specific. It’s going to be specific to who makes the right decisions.”
Other analysts caution that higher prices fueled by tariffs will subtly impact most dealers.
“We’ve seen days’ supply growing and prices moderating in recent months, which suggests the market will not react well to higher new car prices,” Karl Brauer, executive analyst at iSeeCars, tells WardsAuto. “If automakers raise prices to offset these new tariffs, it will further reduce new car demand and likely leave dealers with more inventory that’s harder to sell.”
Brauer warns that while automakers may eventually slow production, there will be lag time – meaning dealers could soon find themselves overstocked.
Terreberry adds, “Inventory supply is going to dictate which manufacturers face price hikes first. But even now, consumer urgency is building, especially as we hit the peak of tax refund season.”
Domestic Dealers May Hold a Short-Term Advantage
Dealers with domestic franchises may find themselves in a relatively stronger position than their import-heavy counterparts. Cadillac, for example, is expected to weather the tariffs better than brands that rely heavily on imports.
“Our vehicles and components are primarily built in the U.S., so I don’t think tariffs pose a major concern for Cadillac in general,” Bill Camastro, dealer principal at Gold Coast Cadillac in New Jersey, tells WardsAuto. “If Cadillac becomes a more attractive option because other brands get more expensive, we’ll welcome the extra business – but not at someone else’s expense. Everyone benefits from a healthy, stable market. When you’re the only one doing well, after a while, you’re not going to be.”
Brauer agrees. “Domestic manufacturers will have an edge over import brands, though their prices will still climb, or their margins will shrink,” he says. “European brands with limited U.S. production will be hit hardest. Asian brands with stronger U.S. manufacturing presence will fare better.”
While the deadline looms, Terreberry notes the industry is still unclear on how tariff enforcement will unfold.
“It won’t be an overnight shock to pricing,” she says. “New vehicle pricing may feel an immediate impact, but much like what we saw during COVID, those effects will ripple through the market – including used vehicles and trade values.”
For dealers, how they communicate with customers may be just as important as how they manage their lots. Matt Jones, senior director of brand and industry at TrueCar, who spoke with WardsAuto as a former, long-time dealership executive, emphasizes that many shoppers don’t connect the dots between tariffs and pricing shifts.
“People are busy living their lives and may not be focused on automotive like we are,” Jones tells WardsAuto. “Customer education in the early stages of the tariffs will be crucial, just as it was in the early stages of COVID.”
Jones encourages transparency – especially around brands temporarily absorbing tariff costs. “If a brand is eating the cost of tariffs, that’s a strong selling point. Make sure customers know it.”
Used Inventory a Critical Safety Net
Brauer, Jones and Terreberry see used vehicles as an essential hedge. Dealers are advised to aggressively acquire trade-ins, optimize reconditioning and turn inventory quickly.
“Inventory acquisition will be the hardest thing for dealers,” says Terreberry. “You’ve got to keep inventory moving and keep your marketing dollars up. There are still plenty of revenue opportunities, even if new-car volume takes a hit.”
Terreberry points to the post-pandemic period as a reminder. “Dealers who leaned into disruption saw some of the most profitable times in decades. The same is true now – but only for those who stay proactive.”
