U.S. Auto Market Hit Hard by Tariffs, May Sales Record Sharpest Decline in Five Years

The Trump administration’s tariff measures continue to exert downward pressure on the domestic automotive sector. According to CCTV News, data released by Wards Intelligence on June 3 revealed that U.S. light vehicle sales in May registered the steepest drop in five years.

The 25% tariff on imported vehicles imposed by the U.S. government came into effect on April 3. Analysts attribute the weak performance in May partly to consumers accelerating purchases in March and April ahead of anticipated price increases.

In addition to tariffs on complete vehicles, a 25% levy on key auto components, including engines, transmissions, and batteries, took effect on May 3. Given the global nature of supply chains, even vehicles assembled in the U.S. are impacted, as many core parts are sourced from abroad.

These tariffs have also influenced the used car market, where rising demand for affordable alternatives has pushed prices upward. Tariffs on auto parts are expected to raise repair and insurance costs, contributing to broader inflationary pressures.

The tariff policy aims to repatriate automotive manufacturing and bolster domestic industry. On May 30, President Donald Trump stated that U.S. automakers, including Tesla, must manufacture both entire vehicles and all components within the United States. He criticized past production practices in Canada, Mexico, and Europe and emphasized that this shift must occur within the next year.

Several automakers have already adjusted prices in response. Ford announced price increases for three Mexico-made models—“Maverick,” “Bronco Sport,” and “Mach-E”—citing the tariff policy as one reason. The adjustments, effective for imports produced after May 2, include hikes of up to $2,000.

Subaru of America also plans price increases to reflect “current market conditions.” According to a dealer notice, prices will rise by $750 to $2,055 depending on model and trim, with changes expected to take effect at dealerships in June.