Forecast: US tariffs on imported vehicles would cost automakers 1 million annual sales

Should the Trump administration impose tariffs on imported vehicles, U.S. auto sales could drop by somewhere between 1 and 2 million vehicles this current year alone, according to a forecast by analysis firm LMC Automotive.

The projection assumes that if automakers absorb at least half the cost of a tax on imported vehicles, the loss would be of 1 million units, said Jeff Schuster, senior vice president of forecasting. But, if companies pass the full 25% cost on to consumers, it could wipe out about 2 million sales, or more than 10% of annual U.S. deliveries, he said.

President Trump ordered last month to investigate auto imports for potential trade penalties based on national security concerns. The U.S. government will hold public hearings on the matter during two days in July.

According to Schuster, U.S. consumers would likely react in three ways. Some would look to the used car market, especially lightly used cars coming off lease. Others would shift to domestically produced vehicles with cheaper price tags. And a third group might just postpone buying a new car, under the assumption that the tariffs are temporary.

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