Tariffs Spur Auto Frenzy but Curb Other U.S. Spending

Across the country, car buyers have rushed to dealerships ahead of looming tariffs, and some shoppers even upgraded their iPhones early. Yet for most goods and services, Americans are pressing pause rather than stockpiling, surveys and Federal Reserve reports show. Higher duties on imported vehicles and parts have fueled a 5.3 percent jump in auto sales in March, while sales excluding motor vehicles rose just 0.5 percent, according to Commerce Department data. Cox Automotive estimates that a 25 percent tariff on non-U.S. assemblies will add about $6,000 to the cost of an imported vehicle and $3,600 to U.S. models burdened by higher parts costs.
Dealers say showroom traffic jumped sharply once the tariffs were confirmed, with March sales running 22 percent above last year’s pace. “Everybody’s buying now because they’re afraid prices are going up,” said Craig DeSerf of Gulf Coast Chevrolet Buick GMC in Texas. But with inventories of tariff-free cars dwindling, Cox cautions that sales could stall once those models sell out and consumer confidence falters.
Market research finds that while nearly 12 percent of consumers accelerated a car purchase because of tariffs, far fewer rushed into other big-ticket buys. A NielsenIQ survey in late March found 35 percent of Americans plan to delay major purchases—homes, appliances or furniture—due to tariff uncertainty, compared with just 7 percent who said they would buy early to beat higher prices. Home sales in March fell to their slowest pace since 2009, in part because mortgage rates have climbed alongside trade tensions.
Major retailers likewise report no evidence of pandemic-style hoarding. Walmart CFO John David Rainey and Sam’s Club CEO Chris Nicholas both told investors they have not seen material early buying of household staples or electronics. Placer.ai foot-traffic data show year-over-year increases at grocery and general merchandisers but declines at home improvement and furniture stores, suggesting selective rather than broad stockpiling ahead of possible price hikes.
Even as consumers stockpile cars, they are tightening their belts elsewhere. The Federal Reserve’s latest Beige Book reported that overall consumer spending, excluding autos, was weaker in March, with business and leisure travel down and “uncertainty around international trade policy pervasive.” P&G CFO Andre Schulten said tariffs have contributed to “a more nervous consumer” who has pulled back in recent months and migrated toward big-box and club retailers in search of value.
Airlines similarly are feeling the pinch. Domestic unit revenue at Southwest, Delta and United has softened enough that each carrier has pulled or scaled back its full-year guidance, trimming capacity to match slowing demand. Average airfares fell 5.3 percent in March after a 4 percent drop in February, as carriers offered sales to fill seats.
As households weigh the impact of tariffs on everything from steel to smartphones, many are choosing to delay discretionary spends. Dallas attorney Tiffany Armstrong postponed a planned kitchen remodel until she can better gauge appliance and material costs, though she did sprint to upgrade her iPhone—only to learn days later that Apple products were ultimately exempted from the new duties. For now, that exemption may offer a rare reprieve for consumers and a reminder of how quickly trade policy can turn on a dime.

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Sources: AirGuide Business airguide.info, bing.com, cnbc.com