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Tariff Impact Forecast

J.D. Power tries to foresee how duties will affect vehicle prices, sales.

by Hannah Mitchell
April 17, 2025
Tariff Impact Forecast

Automakers will need to absorb at least some of the tariff costs, including deciding whether to maintain lower-margin but highly tariffed models, J.D. Power predicts.

Credit:

Pexels/Adrian Gambet

2 min to read


With the obvious caveat that the U.S. economy is challenging to predict right now, a new forecast at least tries to pin down what the auto industry could expect as the rest of the year unfolds.

The J.D. Power look ahead, while acknowledging the undeniable impact of current and impending U.S. trade tariffs on automakers, expects that brands won’t pass on the full cost to consumers since doing so would cut sales.

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“In order to maintain reasonable volumes, a large portion of tariffs must be absorbed,” said J.D. Power President of Data and Analytics and Chief Product Officer Thomas King in the forecast.

With those qualifications, it forecasts new-vehicle price increases starting in the late spring and settling at an average of about 5% by the fourth quarter in what J.D. Power calls a “new normal.” That would translate to an average of $2,300 per vehicle, despite current tariff exposure for U.S. retail auto sales equating to an average of $4,782 per vehicle.

The price increases would in turn result in reduced sales for an 8% drop in annualized retail deliveries, or 1.1 million units, J.D. Power expects. Depending on how tariff policy plays out, though, it said the decrease could be as low as 5% or as high as 12%, not taking any larger economic factors into account.

Tariff effects would also be spotty due to automakers’ varying degrees of exposure based on the volume of vehicles and/or auto parts they import, the data provider pointed out. The tariffs could thereby bring different effects even within an individual brand’s lineup.

Automakers will need to absorb at least some of the tariff costs, including deciding whether to maintain lower-margin but highly tariffed models. They could move supply to markets less exposed to tariffs and increase domestic production, along with retooling parts sourcing, J.D. Power said.

Originally posted on F&I and Showroom

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