MW Car buyers drove sales to a 4-year high to beat tariffs. Now sales are running out of gas.

By Jeffry Bartash

Trade wars cause U.S. economy to seesaw

U.S. trade wars turbocharged sales of new cars and trucks in the spring to a four-year high, but the mad dash by consumers to avoid tariff-related price increases ran out of gas in May.

Sales of new cars and trucks in the U.S. dropped almost 10% in May to a 15.6 million annual rate, according to automotive researcher Wards Intelligence. That's how many vehicles would be sold over the entire year if the same number that were bought in May were purchased in every month.

The big ups and downs in car purchases this year illuminate the disruptions caused to the economy by the Trump administration's efforts to remake a global trading system that has been in place for decades.

Economists predict the U.S. will suffer slower and more uneven growth - and potentially higher inflation - until the trade fights are resolved.

The tariffs have also altered the timing of when individuals and companies make big purchases. The car business is a good example.

Buyers piled into dealerships in March and April to buy new cars and trucks before the Trump administration's auto and steel tariffs raised prices.

Sales raced to as high as a 17.8 million annual rate in March from less than 16 million in the first two months of 2025. The last time sales were that strong was early 2021, as the U.S. emerged from the pandemic.

Now comes the flip side of the coin: dwindling sales.

Dealers have begun running out of vehicles they obtained before the tariffs kicked in, while the rising costs of imported goods and domestic steel have pushed some carmakers to raise prices.

Ryan Sweet, chief economist at Oxford Economics, said auto sales in March are likely to be the high point of the year. He predicts sales will continue to slow before rebounding next year.

Higher prices and a lack of vehicles for sale - especially less expensive cars - hampered sales in May.

The Trump administration has relaxed some tariffs on vehicles, but it just doubled them on steel and aluminum. Metals tariffs could complicate the efforts of carmakers to build and sell more vehicles.

Car purchases play a big role in retail sales and in overall consumer spending, the main engine of the economy. Rising car sales tend to be an indicator of a strong economy.

A potential slowdown in sales tied to the tariffs wouldn't be enough to send the U.S. economy into a tailspin, economists say, but automobile-industry leaders warn of tougher times ahead.

Ford $(F)$, for instance, suspended its regular forecast of future sales and profits because of uncertainty sparked by the trade wars.

-Jeffry Bartash

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June 04, 2025 12:13 ET (16:13 GMT)

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