Trump's tariffs hurt US auto sales

US retail sales for May came in lower than expected, down 0.9% from April, and the culprit was auto sales. Here's the breakdown by sector:

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Recall that President Trump put tariffs of 25% on autos and auto parts from April 2nd, and 25% tariffs on imported steel and aluminium, key raw materials in car making.

He then walked some of it back saying that anything USMCA compliant would be tariff-free. The trouble is many small parts suppliers in Mexico and Canada are not compliant as less than 60% of their inputs come from the US, Canada and Mexico.

In February and March, as it became clear Trump was gearing up to put tariffs on auto parts, many companies raced to stockpile parts. The question is, "What happens if the tariffs are still in place when the stockpiles run out?"

Job losses have already started as car makers try to offset tariffs by streamlining. General Motors announced they were cutting 750 jobs at their assembly plant in Oshawa, Canada. Stellantis temporarily laid off 900 workers at their Michigan and Indiana plants.

Foreign car makers are also struggling; Japan's exports to the United States in May 2025 fell 11.1% compared to May 2024. 28% of Japan's exports to the US are autos.

Meanwhile no trade deals have been inked apart from a small reciprocal deal with the UK exempting 100,000 cars from tariffs.

The clock is ticking and we're in the early stages of this trade war. The real crunch will come when the stockpiles are gone. At that point prices will jump.