As the 25% vehicle import tariff continues and the May 3 tariff implementation on auto parts approaches, those in the auto glass and broader automotive industries have a lot of questions.
The Collision Industry Electronic Commerce Association (CIECA) recently hosted a webinar about what automotive repair shops can expect from the tariffs. Ryan Mandell, director of claims performance for Mitchell, an Enlyte company, presented data and analysis.
Mandell explained that, under the United States-Mexico-Canada Agreement (USMCA), most imports from Canada or Mexico are not tariffed. This is good news for the automotive industry, Mandell says, because original equipment manufacturers (OEMs) like General Motors, Ford, Toyota, Nissan and Volkswagen “rely heavily” on Canada and Mexico for OEM and replacement parts.
The tariff effects vary based on what percentage of a vehicle’s parts are imports. Graph provided by Mitchell, an Enlyte company.
Mandell adds that the tariffs on imported vehicles would be calculated based on the value of the non-USMCA-compliant parts in the vehicle, not the whole vehicle’s value. Mandell says no manufacturer is completely exempt.
“There is no manufacturer [unaffected by tariffs],” he says. “Some are more greatly exposed, but there’s not a single manufacturer that is going to be able to produce vehicles and parts tariff-free.”
Mandell says the automotive supply chain is global, meaning vehicles and the parts themselves are made of materials from many nations.
“You can look at something like an Advanced Driver Assistance Systems (ADAS) sensor,” he says. “It’s made up of a number of materials, such as copper, ceramics, sometimes glass, in addition to composite plastics. Those can all be sourced from a variety of locations around the world and potentially subject to tariffs.”
Mandell explains that some automotive components, like sheet metal, are exempt. Parts like ADAS components and auto glass are not.
“Windshields are a big one,” he says. “We know that a lot of windshields, especially in the aftermarket, are coming from mainland China.”
Even though windshields and other parts aren’t subject to automotive-specific tariffs until May 3, Mandell says it’s possible tariffs will affect parts prices sooner than whole vehicles. He predicts vehicle costs will begin climbing in July or August, but the prices of some parts could start rising earlier in the summer.
“[The base tariff value is determined] from the wholesale value of the good,” Mandell says. “That’s determined by the manufacturer, and it applies to both parts and whole vehicles.”
Used car prices will increase along with new ones, thanks to increased demand for less expensive vehicles Mandell says. Higher car costs could also increase the average amount of time consumers drive cars before getting new ones.
Mandell emphasized that tariffs are not cumulative, and goods-specific tariffs take priority over country-specific tariffs. The tariff on imports from China is currently 145%, but windshields and other automotive items imported from China will just be subject to a 25% tariff.
Automotive businesses can take action to mitigate some of the tariffs’ effects, Mandell says. He encourages automotive businesses to figure out where the parts they use are made so they can get a feel for what kind of price increases to expect. He also suggests repairing damage rather than replacing parts whenever possible.
Mandell says even though the tariffs have fluctuated greatly so far, they’ll likely remain for at least a few years. It’s best to prepare.
