Car buyers rush to purchase vehicles: “I think you’re starting to see a little more panic”

For much of last week, the big economic news centred around the raft of ‘reciprocal tariffs’ that President Donald Trump unleashed on trading partners around the world. But while that made headlines, another Trump economic policy has already start to take effect.

On Thursday a 25% tariff on imported cars went live. From May 3, the tariff will be expanded to also include imported car parts, further spreading the effects. The White House has insisted that these measures will help to boost US manufacturing but we’re already seeing some other side effects.

With the tariffs pending, a number of non-American car manufacturers reported better-than-average sales. Hyundai reported a new company record for March sales, while a Toyota spokesperson revealed that there had been a bump in sales towards the end of the month.

This spate of sales may be good in the short-term but it signifies a more worrying trend. Art Wheaton, director of labor studies at Cornell University’s School of Industrial and Labor Relations, told USA Today: “I think you’re starting to see a little more panic and concern about the tariff."

Manufacturers cut factory jobs

Another unintended short-term consequence has been the loss of some jobs at companies who rely on parts made out of the US. Stellantis - the company that makes Jeep, Dodge, RAM trucks and Chrysler- has announced a temporary halt in production at assembly plants based in Mexico and Canada as a result of the tariffs. As such, Stellantic factories in Michigan and Indiana now have less capacity and around 900 workers have been temporarily laid off.

In an email sent to employees, Stellantis’ North American Chief Operating Officer Antonio Filosa said that the layoffs “are necessary given the current market dynamics.”

For all of the Trump administration’s big plans on tariffs, they fall foul of a simple rule of economics: instability is bad for business. The introduction of sweeping tariffs has given the economy a major jolt and companies are reactively conservatively.

Trump will hope that the additional cost of doing business overseas convinces companies to bring their entire manufacturing and production processes into the US, bringing with them a whole host of new jobs. But in order to make that huge investment the White House will have to convince businesses that these tariffs are here for the long haul.

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