Tariffs create uncertainty for car buyers, sellers
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A lot of prospective car buyers visited auto dealerships recently, trying to save money on vehicles before President Donald Trump’s tariffs went into effect this month.
While the president placed a 90-day pause on his reciprocal tariffs this week, the decision does not affect the 25% tariffs imposed on imported cars and auto parts on April 3. New vehicle sales surged in late March ahead of that deadline.
With the tariffs still in place, sales of used cars have also been climbing. But consumers, automakers and dealerships are still dealing with a lot of uncertainty.
CarMax, which sells used cars and is headquartered in Richmond, Virginia, said this week that it was suspending the timelines for long-term growth targets.
“We are focused on growing the business, and we continue to make progress toward our long-term goals,” CarMax said in a statement. “However, we are removing the time frames associated with them given the potential impact of broader macro factors.”
One of those major factors is tariffs.
Consumer sentiment from the University of Michigan’s index fell on Friday to 50.8 — the lowest it has been since the pandemic.
Falling consumer sentiment generally indicates Americans will reduce spending.
Virginia senator says businesses are worried
Virginia Sen. Tim Kaine, a sharp critic of the tariffs, said it was “pretty extraordinary” to hear that CarMax had decided to suspend its long-term growth goals.
The Democratic lawmaker noted that with tariffs in place on new cars, it would seem to suggest that a company like CarMax might benefit, since consumers would be looking for cheaper alternatives.
But he pointed out the issue isn’t that simple.
“Because if there’s a global tariff regime that costs American families … $2,500 to $4,500 a year, as is the estimate, people are going to have a lot less money to spend,” he said. “And so that means maybe a tariff on new vehicles coming in might help us, but if people have less money to spend, it’s going to hurt us.”
This week, CarMax reported disappointing quarterly profits and sales.
But the company also reported vehicle sales have been growing recently and the average price for a car has gone up.
While tariffs don’t affect used-car prices directly, many analysts predict they will continue to go up, due to higher demand.
New attempt to roll back tariffs
Kaine continues to try to fight tariffs, which the president has said are necessary to even the international trade playing field and bring back U.S. manufacturing.
His legislation to undo tariffs against Canada was recently passed by the Senate, though it is not expected to go anywhere in the House.
Kaine has now joined with other lawmakers in an effort to roll back global tariffs imposed by the president under an emergency declaration.
“No president has the authority to unilaterally impose such sweeping across-the-board-tariffs without congressional approval,” Kaine said in a statement.
Sen. Rand Paul (R-Ky.) is a co-sponsor of the bill.
The legislation, if it gets voted upon, will not be taken up until lawmakers return from their two-week recess.
Kaine said he will be traveling a lot around the Commonwealth during the break.
“I’m going to be heavily around Virginia, asking people, what’s going on?” he said. “But I’m not going to have to ask, because they’re going to be telling me even before I ask them, and I’m going to get an earful.”