Long Island car dealers, customers nervous about price impact of 25% auto tariffs

Smithtown Kia was abuzz Thursday with customer and employee chatter about new tariffs that soon will be slapped on car imports, said Paul Varandas, a general sales manager.

Springtime is the kickoff to the busy summer selling season at the dealership, whose salespeople work on commission, he said.

"So, obviously, we’re all a little taken aback and anything that happens when it affects customers, we get a little scared," said

"What is it going to do to business?" he said.

President Donald Trump announced the day before that the U.S. would be imposing 25% tariffs on imported vehicles and certain parts. The tariffs, which are set to go into effect April 3, could increase car prices and potentially drive away customers, auto industry experts said.

Kia is owned by The Hyundai Motor Group, a South Korean company that had 35.7% of the cars it sold last year in the U.S. assembled inside the country.

The Trump administration hopes that the tariffs generate $100 billion in revenue each year, lead to more U.S.-based factories and simplify a complex supply chain that often means vehicles are assembled across several countries.

"This will continue to spur growth," said Trump, who also noted that the tariff would be "permanent."

But auto industry experts, economists and dealers remain concerned that higher prices brought on with the tariffs could slow down car sales and make repairs costlier in a climate in which consumer confidence is already waning. They note that a possible slowdown in sales could mean job losses for people working at dealerships, and that it could take years to build the manufacturing base in the U.S. to avoid the tariffs that could be in place.

Last year, 50% of new vehicles sold were built in the United States, while 16.5% were built in Mexico, 8.6% in Canada and 24.9% elsewhere, according to Edmunds, an online car shopping resource. The average cost to buy a new vehicle last month was more than $47,000. 

"Buying a car is all about affordability, and anything that raises the price of the vehicle could impact the affordability for an individual who's looking to buy a vehicle," said Mark Schienberg, president and CEO of the Greater New York Automobile Dealers Association, which has roughly 450 dealer members in the downstate area.

Schienberg said dealers might have the inventory in the short term to avoid raising prices, but that won’t last depending on how the proposed tariff is levied.

Steven Kent, chief economist for the Long Island Association, said auto tariffs would likely lead to changes in local consumer behavior and demand.

"People would hold onto their used cars longer because buying a new car is going to be pricier," said Kent, associate professor of economics at Molloy University.

But because more Long Islanders might be incentivized to hold onto existing vehicles longer, the supply of used cars at dealerships could shrink, ultimately leading to higher prices on used cars, too, he said.

"You might have a slight supply and demand imbalance," Kent said.

After Trump made the announcement of the tariffs, General Motors shares fell about 5% during trading on Thursday morning. Stellantis, which owns Chrysler and Jeep, saw its shares dip by 1%, but Tesla saw its stock price rise.

Cody Lusk, president and CEO of the American International Automobile Dealers Association, said the tariffs could put dealership jobs at risk if they’re enacted.

"If you're going to be selling fewer and fewer vehicles you need, you know, fewer employees," Lusk said in a phone interview.

Mariano Torras, economics professor at Adelphi University and chair of its Finance and Economics Department, added that the proposed auto tariffs would likely only raise costs for consumers, manufacturers and dealers. He called the suggestion that they would increase auto manufacturing operations in the U.S. "nonsense."

"If there is going to be anyone winning from this, it’s going be some speculators betting on movements in the market," he said.

The Legend Auto Group sells five brands of new vehicles on Long Island — at Nissan and Infiniti dealerships in Syosset, Porshe and Volkswagen dealerships in Amityville and an Audi dealership in Massapequa.

The tariffs could lead to difficult decisions for dealers, manufactures and consumers, said Wayne Siegel, president and owner of Legend.

"Certainly, there is concern at every level ... from the manufacturers down to the porter who works in the dealership, [wondering] how will it affect them and will we be OK," said Siegel, who said he is taking a wait-and-see approach.

Syosset resident Frank DiCostanzo, 64, leased a 2025 Nissan Rogue at Legend Nissan on Thursday, and plans to sell his 2018 Kia Sportage with 92,000 miles.

He was motivated to shop by leasing prices falling to more-affordable levels after soaring the past few years, as well as the uncertainty over how tariffs could impact car prices, he said.

"I’m just afraid that the leasing prices are going to go back up again [because of the tariffs], so let’s jump into a lease now before things possibly get crazy," he said.

With AP

CORRECTION: Mark Schienberg's name was misspelled in a previous version of this story.