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Auto sales are better than expected, but proposed tariffs would change that

row of colorful car hoods
User Zelda Richardson
Flickr http://bit.ly/1xMszCg
More cars are going to buyers with less-than-stellar credit.

Auto sales in June were higher than analysts expected, despite rising interest rates and rising prices for cars.  Sales are expected to slow this year compared to last year, but not by much.

But proposed import tariffs on cars would throw a monkey wrench into the works.  President Trump says he is considering imposing as much as a 25% tariff on all vehicles made outside the U.S. 

That would hurt all auto companies, including GM, Ford, and Fiat-Chrysler, which make many of their cars in Canada, Mexico, and China, and import them into the U.S.

Cox Automotive economist Charlie Chesbrough hopes Trump backs off the plan.

"Early estimates suggest about a one to two million hit to vehicle sales (from the tariffs)," says Chesbrough.  "That would be sort of an early guestimate.  It could be much more than that if we get into a full-blown trade war and it knocks the economy into a recession."

Other analysts think the tariffs would increase per-vehicle costs by about $4,000 to $5,000.  The tariffs would also likely cost jobs in the auto industry.

Tracy Samilton covers energy and transportation, including the auto industry and the business response to climate change for Michigan Public. She began her career at Michigan Public as an intern, where she was promptly “bitten by the radio bug,” and never recovered.