Pueblo, CO – Colorado businesses, particularly those in the auto industry, are grappling with confusion and instability following President Donald Trump’s shifting tariff policies on goods from Canada and Mexico. The uncertainty surrounding these changes is having a significant impact on local dealerships and manufacturers, leaving them unsure about how to plan for the future.
On Tuesday, President Trump appeared to follow through on his promise to impose a 25% tariff on products imported from Canada and Mexico, two of the United States’ largest trading partners. However, just one day later, he reversed course, issuing a temporary reprieve for parts of the tariff at the request of the auto industry. White House Press Secretary Karoline Leavitt announced that the president would grant a one-month exemption on autos coming through the United States-Mexico-Canada Agreement (USMCA), which replaced NAFTA.
“The president is giving them an exemption for one month so they are not at an economic disadvantage,” Leavitt said, adding that reciprocal tariffs would still take effect on April 2, 2025.
This back-and-forth has left businesses in a state of flux, unsure of how to set prices or plan inventory. Kevin Shaughnessy, president and CEO of Phil Long Dealerships in Colorado, expressed frustration with the unpredictable nature of the tariff situation, explaining that the ever-changing policies make it difficult to give customers reliable information.
“The auto industry, along with many others, operates under the guidelines of the USMCA,” Shaughnessy said. “This agreement allows for parts to be shipped back and forth across the U.S.-Canada-Mexico borders for assembly, but with tariffs in place, the costs could change with every shipment.”
In an effort to protect against rising prices, Phil Long Dealerships has been stocking up on parts ahead of the tariff implementation, purchasing components while they are still free from additional costs. While this strategy ties up capital, Shaughnessy hopes it will allow his business to maintain stable vehicle pricing for as long as possible. However, once those pre-tariff parts are sold, the dealership will face higher costs for new vehicles manufactured with steel and aluminum hit by previous tariffs.
This uncertainty is further compounded by the potential for price hikes in the near future. Skyler McKinley, regional spokesperson for the American Automobile Association (AAA), warned consumers that they should consider making a purchase sooner rather than later. McKinley noted that studies suggest the tariffs could increase car prices by anywhere from $4,000 to $14,000, depending on the make and model.
“If you’re in the market for a new car, now is a great time to buy it,” McKinley advised. “If you’re not ready to buy just yet, be prepared to adjust your budget as prices could rise once tariffs are fully enacted.”
The broader economic impact of these tariffs could be significant, especially given the long-standing relationship between the U.S., Canada, and Mexico in the auto industry. The Canada-U.S. Auto Pact, signed in 1965, established a framework that has allowed automakers to efficiently trade and collaborate across the continent for decades. Trump’s trade war threatens to disrupt that intricate web of supply chains, forcing companies to adjust to new realities.
McKinley emphasized the complexity of the situation, noting, “The vertical integration of auto manufacturers across North America has been in place for generations. It’s not something that can be changed overnight, and these shifts create a lot of uncertainty for the future.”
As businesses continue to cope with the unpredictability of tariff policies, the coming weeks and months are likely to be filled with anxiety and further questions about the future of trade between the U.S., Canada, and Mexico. For now, many businesses are holding their breath, hoping that the final impact on pricing and supply chains will be less severe than initially feared.
