New And Used Car Panic-Buying Is Going To Make Finding A New Ride A Nightmare

While Trump promised to stop inflation and lower prices during his campaign, after less than three months in office, he’s done exactly the opposite. And while he quickly folded to pressure on some of those tariffs, the chaos and economic uncertainty Republicans have unleashed are hitting the new and used car markets hard. We’re already seeing the supply of new and used vehicles listed for sale drop significantly as buyers rush to get a deal before prices increase, CNBC reports.

“Consumers are trying to get ahead of tariffs on imports,” Jonathan Smoke, head economist for Cox Automotive, told an online audience earlier this week. “The decline in [new] days’ supply was one of the largest drops we’ve seen in several years.” Unfortunately for consumers, the sudden drop in inventory doesn’t just mean fewer options when it’s time to buy. Due to an obscure economic theory known as “supply and demand,” it also means higher prices.

Back at the beginning of March, new car dealers were reportedly sitting on 91 days’ worth of inventory. Fast forward to today, and that supply has dropped to only 70 days. In a normal month, you’d typically expect to see inventory fluctuations of seven days at most, not more than 20. New car sales volume is also up about 8% year to date, with the seasonally adjusted pace up 22% compared to last year. 

Meanwhile, used car inventory has been low for a while and has dropped even lower since Trump fulfilled one of his most consistent campaign promises and began instituting tariffs. Currently, used car dealers are sitting on a 39-day supply, down four days since last month. Sales are also “up sharply,” climbing about 7% year to date. The limited supply is already raising prices, too, with Cox reporting the average price for a 2022 model year vehicle rose 0.3% in just the last week, while the average wholesale price jumped 1.0%. 

That may not sound like much, but remember, we’re talking weekly increases here, not monthly. And a 1% increase every week adds up pretty quickly over the course of a couple months. 

New and used car dealers may currently be raking in the cash, but that trend won’t last long. Once the tariff-free cars are gone, expect those sales to dry up quickly. CNBC reports one estimate suggests increased vehicle costs from Republican tariffs will result in more than 2,000,000 fewer annual vehicle sales in the U.S. and Canada. Consumers may not end up paying the full cost of the tariffs, but they’ll at least pay part of them, and with the price of insurance also expected to rise, higher overall costs for new vehicles are expected to push more buyers into used cars. 

With used cars already in short supply, the increase in demand will only drive prices higher than they already are. Throw in rising unemployment, the increased cost of everything else and stalling wage growth, and things aren’t looking great. So while you definitely shouldn’t rush out to buy a car you don’t need, it’s also completely understandable that so many people are trying to get ahead of higher prices. I mean, heck, I did exactly that last month, even if I wasn’t planning to until my car got hit. 

Of course, it’s entirely possible Trump could reverse course on tariffs, but considering how hard he campaigned on them, his use of tariffs during his first term and his vocal support for them since at least the 1980s, that doesn’t seem likely. For the sake of all our wallets, though, let’s cross our fingers and hope he does.