Trump’s tariffs will increase cost of fixing your car
With levy on Chinese materials and goods, some suppliers of replacement parts are already raising prices.
Car owners are likely to start paying more for tires, windshield wipers and mirrors as businesses in the replacement auto parts industry — from component makers to local mechanic shops — scramble to cope with President Trump’s tariffs on imported Chinese materials and goods.
Steep levies have already boosted costs of some products made with steel and aluminum, and more duties could affect hundreds of other items these companies develop, make and sell.
A couple of suppliers to Springfield, Mo.-based O’Reilly Automotive Inc. have added a “fractional” part of the tariffs onto costs and a few more will do so early in the fourth quarter, Chief Executive Greg Johnson said during the company’s second-quarter earnings call. So far “we have been able to pass that along” to customers, he added. These include do-it-yourself vehicle owners and service technicians shopping at O’Reilly’s more than 5,000 stores.
AutoZone Inc. is identifying products that could soon cause problems for the Memphis, Tenn., company. Prices of components made with steel, such as rotors and other brake parts, will certainly have to rise, spokesman Ray Pohlman said. “You can’t get the things we sell from very many places,” he said. “You can’t just buy it on any street corner.”
While the tariff threat is broad, it may affect less than 15% of retailers’ inventory, Wedbush Securities Inc. analyst Seth Basham said. Auto parts stores source about 50% to 60% of their products from China, but only about 20% to 25% of these are included in the latest round of tariffs, he said. These duties cover a wide variety of imports with a total value of more than $200 billion and won’t take effect until after a comment period ends Sept. 6.
Some parts suppliers are less sanguine. Brian Cohn, president of Jupiter, Fla.based Multi Parts, said the company’s typical flow of orders has already slowed, and higher prices on materials have led him to stop hiring new workers. Multi Parts’ facilities in Shanghai, Hong Kong and Belarus manufacture brake and wheel cylinders, wheel hubs, valve-timing solenoids and other components. Customers include parts distributors and other manufacturers of auto repair products.
Brad Kraft, CEO of Hopkins Manufacturing Corp., said his company imports many goods from China, and new tariffs already in place have driven up prices on about 350 items made with steel and aluminum. If the proposed tariffs on the additional $200 billion are enacted, prices will rise on at least 3,000 more of its products, which include tires, oil and fuel filters and components for towing systems.
Hopkins, based in Emporia, Kan., has two manufacturing facilities — in Juarez, Mexico, and Los Angeles — and an office in Ningbo, China, that coordinates logistics with about 45 supplier factories in the country. Kraft says he’s considering using suppliers in Taiwan instead. Sourcing products from Taiwan is typically more expensive, but it now looks like a cheaper alternative, he said.
Re-sourcing products is time-consuming and expensive, however. Companies will need to feel certain that tariffs will stick before they make such changes, said Aaron Lowe, a spokesman for the Auto Care Assn., an industry trade group.
One risk of prolonged price hikes is that car owners may put off maintenance, reducing sales of replacement parts. This also could increase the number of unsafe vehicles on the road, Cohn noted.
“The typical auto aftermarket consumer already has a bit of a pinch on their pocketbook,” he said. “So people will likely just choose to go without repairs for a while.”
Despite the potential for lost business, Chris Lynch, owner of Wetmore Tire & Auto in Ferndale, Mich., says he plans to pass along to customers any price increases on the low-end tires and brakes he imports from China.
“They are going to have to pay that extra cost in the end,” he said, “because we’re not going to eat it, that’s for sure.”