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U.S. car sales have skyrocketed as consumers frontloaded large purchases to help preempt President Donald Trump’s aggressive new trade collection.
Retail sales rose 1.4% in March, the Census Bureau reported Wednesday. The main driver of growth was a seasonally adjusted 5.7% jump in car sales, the biggest increase since January 2023.
The report showed that “savvy consumers” were pushing forward to purchasing their grand scouts to avoid tariff-driven price increases, said ING’s chief international economist James Knightley.
Starting April 3, Trump has charged 25% of the imports of foreign-made cars.
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Additional costs vary by model and manufacturer, and are absorbed by the combination of automakers, dealers and consumers. Michigan Consultant Anderson Economic Group estimates that tariffs will add between $4,000 and $10,000 to the costs of most vehicles and about $12,000 to the costs of EVs.
Consumers said in early 2025 that they “have undoubtedly a tariff effect on athletic vehicles” as they “aware” Trump’s aggressive economic policies and its various potential impacts.
But the economists warned that strong sales numbers in March could pave the way for a sharp decline in spending later this year, especially if tariffs are passed downstream to consumers, as widely expected.
“We hope that demand will soon drop sharply next month,” said Joe Bruseras, chief economist at tax and consulting firm RSM US. He said that car sales would fall first, but warned of weakness “overall” as Trump’s aggressive economic policies took hold.
Consumer spending has remained strong in recent years as many Americans built their savings during the pandemic, but Knightly said that consumers expected “least growth engines” later in the year amid a new fear of inflation and job volatility.
A recent survey by the Federal Reserve Bank of New York found that American unemployment rates jumped to the highest level since the pandemic last month as close inflation expectations rose.
