The tariffs just hit home

For months, I’ve been talking about tariffs, consulting with clients, doing research, giving speeches, and writing articles about the effects of tariffs on businesses and the world economy.  But over the weekend, it all hit home.

I’ve been in the market for a new car for months, off and on test driving a brand or model, foreign and domestic, trying to find something I really liked. Finally, I settled on a dark blue Audi with a light interior. The problem was that this car, in the color I wanted, wasn’t available in Silicon Valley. The Audi dealer salesman said I had two choices ... they could try to find one somewhere in the U.S. on another dealer’s lot, or I could take immediate delivery of one that was available at the port of Oakland, in a bonded location, not yet formally imported into the U.S.

If the dealer could find one on any lot across the country, the cost would be about $46k. However, if I took the one at the port, the 25% import penalty tariff would apply and the cost to me would be about $58k—a $12k difference for the exact same car with no additional features or functions. Just an additional cost. Plus, I would pay sales tax on $58k instead of $48k—another $1,100 addition. WOW!

The difference in price because of the tariffs really hit home for me. Of course, I’ve been seeing gradual increases in prices at the grocery store, drug store, and on Amazon.com. But the increases have been for small amounts, and while impacting my living expenses, they are small compared with the increased price of imported cars. Along with increased sales prices, auto repair parts for imports will now be 25% or more expensive, too. Since foreign and domestic auto parts are sourced globally, this also applies to domestic cars. All these price hikes are accelerating demand and increased prices for used cars. Edmunds.com reports that used car prices have hit record highs in 2025.

The good news—the Audi dealer in Silicon Valley found the car I wanted on a dealer lot in San Diego, and it was delivered within a few days.

We’ve been imagining the effects of tariffs on our lives, but when it finally hits your pocket, it is startling. Within the next few weeks, we will start to see prices creep up unexpectedly at the grocery store, Walmart, Target, the drug store, and our industrial suppliers, as retailers and suppliers burn through their on-hand inventory and start selling new imported goods.

Prepare for sticker shock. Tariffs are going to have a real impact on everyday American lives and American businesses.

SC
MR