If the Trump administration goes forward with placing a 25 percent tariff on new cars, it could cost automakers between one to two million sales.
Analysis done by researcher LMC Automotive said if automakers pass on the full 25 percent tariff to customers, it could cut sales by about two million - about 10 percent of annual U.S. sales. If automakers absorb some some of tariff, the sales drop would reduce to just a million.
Jeff Schuster, senior vice president of forecasting for LMC Automotive tells Bloomberg that consumers would react in one of three ways.
- Look at the used car market
- Move to domestically built products with cheaper pricetags
- Put off buying a new car with the hope this is only temporary
While new car sales have been slipping from the record high of 17.6 million in 2016, LMC Automotive is predicting a still-strong 17.1 million deliveries by the end of the year.