Global Trends and Politics

Auto Tariffs To Cut Sales By Millions, Cost $100 Billion

Published

2 months ago

April 12, 2025

Auto Tariffs To Cut Sales By Millions, Cost 0 Billion

Introduction to the Automotive Industry Crisis

Autoworkers at Nissan’s Smyrna Vehicle Assembly Plant in Tennessee, June 6, 2022. The plant employs more than 7,000 people and produces a variety of vehicles, including the Leaf EV and Rogue crossover.
As President Donald Trump’s 25% tariffs on imported vehicles remain in effect despite a pullback this week on other country-based levies, analysts are expecting massive global implications for the automotive industry due to the policies.

Expected Impact on the Industry

They’re expecting to see a drop in vehicle sales in the millions, higher new and used vehicle prices, and increased costs of more than $100 billion for the industry, according to research reports from Wall Street and automotive analysts.
"What we’re seeing now is a structural shift, driven by policy, that’s likely to be long-lasting," Felix Stellmaszek, Boston Consulting Group’s global lead of automotive and mobility, told CNBC. "This may well be the most consequential year for the auto industry in history – not just because of immediate cost pressures, but because it’s forcing fundamental change in how and where the industry builds."

Cost Increase Projections

BCG expects tariffs to add $110 billion to $160 billion on an annual run rate basis in costs to the industry, which could impact 20% of U.S. new-vehicle market revenues, increasing production costs for both U.S. and non-U.S. manufacturers.
The Center for Automotive Research, a Michigan-based nonprofit think tank, believes costs for automakers in the U.S. alone will increase by $107.7 billion. That includes $41.9 billion for Detroit automakers General Motors, Ford Motor, and Chrysler parent Stellantis.

Effect on Auto Stocks and Sales

Both analyses take into account the 25% tariffs on imported vehicles implemented by Trump on April 3 as well as forthcoming levies of the same amount on automotive parts that are set to begin by May 3.
Automakers and suppliers may be able to bear some of the cost increases, but they’re also expected to pass them along to U.S. consumers, which could in turn lower sales, according to analysts.
"We believe the tariffs as proposed will raise the cost of both importing and manufacturing vehicles in the US by at least a low to mid single digit thousand dollar level on average, and we believe it will be hard for the auto industry to fully pass this on, especially with softening consumer demand more generally," Goldman Sachs analyst Mark Delaney said in a Thursday investor note.

Response from Automakers

Automakers have responded to the tariffs in a variety of ways. Manufacturers that are mostly domestic, such as Ford and Stellantis, have announced temporary deals for employee pricing, while others, such as British carmaker Jaguar Land Rover, have ceased U.S. shipments. Hyundai Motor also has said it would not raise prices for at least two months to ease consumer concerns.
Consumer sentiment grew even worse than anticipated in April as the expected inflation level hit its highest since 1981, a closely watched University of Michigan survey showed Friday.

Economic Impact

Sam Abuelsamid, vice president of insights at auto advisory firm Telemetry, expects many automakers have at least a roughly two-month supply of non-tariff impacted vehicles that they will be able to sell down before needing to increase prices due to tariffs.
Telemetry expects the higher costs for production, parts and other factors to result in upward of 2 million fewer vehicles sold annually in the U.S. and Canada, which will have ripple effects on the broader economy.
"A couple million-unit reduction in sales will have a broad impact economically," Abuelsamid said. "That’s driven by higher prices, not just for vehicles, but across the board … which is going to limit people’s’ spending power."

Affordability of Vehicles

Affordability of new and used vehicles has been a problem for several years. On average, Cox Automotive reports new vehicles cost nearly $50,000. That figure doesn’t include the cost of financing such a vehicle, which has risen significantly in recent years in an attempt to combat inflation.
Auto loan rates remain near decades-high levels of more than 9.64% for a new vehicle and nearly 15% for a used car or truck, according to Cox.

Price Increases and Production

"We expect to see declining discounting and then accelerated price increases as the tariffs are passed through and supply tightens, leading to price increases on all types of most new vehicles," Cox Automotive Chief Economist Jonathan Smoke said during a virtual event Monday. "Over the longer term, we expect production and sales to fall, newly used prices to increase, and some models to be eliminated."
Expected price increases vary based on vehicle, but Cox estimates a $6,000 increase to the cost of imported vehicles due to the 25% tariff on non-U.S. assembled vehicles, as well as a $3,600 increase to vehicles assembled in the U.S. due to upcoming 25% tariffs on automotive parts. Those are in addition to $300 to $500 increases as a result of previously announced tariffs on steel and aluminum.

Conclusion

The 25% tariffs on imported vehicles and automotive parts are expected to have a significant impact on the automotive industry, leading to increased costs, higher prices, and reduced sales. The effects of these tariffs will be felt across the industry, from automakers to consumers, and will likely have broader economic implications.

FAQs

Q: What is the expected impact of the 25% tariffs on the automotive industry?
A: The tariffs are expected to increase costs for the industry, lead to higher prices for consumers, and result in reduced sales.
Q: How much are costs expected to increase for the industry?
A: Costs are expected to increase by $110 billion to $160 billion on an annual basis, according to BCG.
Q: Which automakers will be most affected by the tariffs?
A: All automakers will be affected, but those that import a significant portion of their vehicles, such as Jaguar Land Rover, will be particularly impacted.
Q: How will the tariffs affect consumers?
A: Consumers can expect to see higher prices for new and used vehicles, as well as reduced availability of certain models.
Q: What is the expected impact on the broader economy?
A: The tariffs are expected to have a broad impact on the economy, leading to reduced spending power for consumers and potentially affecting other industries that rely on the automotive sector.

Global Trends and Politics

JetBlue to Cut Flights and Costs Amid Uncertain 2025 Break-Even Prospect

Published

2 hours ago

June 17, 2025

WORxK Global News Team

JetBlue to Cut Flights and Costs Amid Uncertain 2025 Break-Even Prospect

Introduction to JetBlue’s Cost Cutting Measures

A JetBlue Airways Airbus A321-231 taxis at San Diego International Airport on March 4, 2025 in San Diego, California. JetBlue Airways CEO Joanna Geraghty told staff the carrier is implementing a host of new cost cuts as softer-than-expected travel demand is making break-even operating margins this year "unlikely."

Reason Behind Cost Cutting

"We’re hopeful demand and bookings will rebound, but even a recovery won’t fully offset the ground we’ve lost this year and our path back to profitability will take longer than we’d hoped. That means we’re still relying on borrowed cash to keep the airline running," Geraghty said in a note to staff dated Monday. U.S. carriers have announced plans to trim capacity, particularly in the second half of the year, as bookings for domestic travel came in weaker than expected this year and fares fell. Airfare in May was down 7.3% compared with last year, according to U.S. Department of Labor’s inflation report.

Impact on Operations

JetBlue has been looking for ways to increase revenue and cut costs after federal judges blocked its planned acquisition of budget carrier Spirit Airlines last year and its Northeast U.S. alliance with American Airlines in 2023. The airline last posted an annual profit in 2019. JetBlue will further cut off-peak flights and trim unprofitable routes. It will also pause plans to retrofit four of its older Airbus A320 jets with new interiors and park them, while the six remaining jets slated for the refurbishment are still on track for next year.

Restructuring Plans

The carrier is also assessing its hiring plans and could combine some leadership roles and rein in travel spending. Last month, JetBlue announced a new partnership with United Airlines that will allow customers to book flights on each other’s airline and earn and use frequent flyer miles. Geraghty told staff that while the carrier is assessing its hiring plans, it will continue to bring on new front-line employees and fill other positions, including a new director for the United partnership.

Investment in Premium Services

JetBlue has invested heavily in premium-class seats in an effort to win over travelers willing to splurge on their trips. The memo said it’s still planning to outfit some of its planes with domestic first class and build airport lounges. "These are the building blocks of a stronger JetBlue, and they remain in motion," Geraghty said.

Conclusion

In conclusion, JetBlue Airways is taking measures to cut costs and increase revenue due to softer-than-expected travel demand. The airline is reducing off-peak flights, trimming unprofitable routes, and pausing plans to retrofit some of its jets. Despite these challenges, JetBlue remains committed to investing in premium services and building a stronger brand.

FAQs

Q: Why is JetBlue implementing cost cutting measures?
A: JetBlue is implementing cost cutting measures due to softer-than-expected travel demand, which is making break-even operating margins this year "unlikely."
Q: What changes can passengers expect from JetBlue?
A: Passengers can expect reduced off-peak flights and trimmed unprofitable routes. However, JetBlue is still planning to outfit some of its planes with domestic first class and build airport lounges.
Q: How will JetBlue’s partnership with United Airlines affect passengers?
A: The partnership will allow customers to book flights on each other’s airline and earn and use frequent flyer miles.
Q: What is JetBlue’s outlook on profitability?
A: JetBlue’s path back to profitability will take longer than expected, and the airline is still relying on borrowed cash to keep operating.

Global Trends and Politics

Baby items get pricier, congressional report says

Published

14 hours ago

June 17, 2025

WORxK Global News Team

Baby items get pricier, congressional report says

Introduction to Tariff Policies and Baby Gear

The cost of some baby gear has risen in recent weeks due to President Donald Trump’s tariff policies, according to a new congressional report. The report analyzed the prices of five common items bought for babies and found that they have increased by 24%, or by $98 combined, between April 1 and June 9.

Impact of Tariff Policies on Baby Gear

The analysis tracked the prices of five popular baby gear categories: car seats, bassinets, strollers, high chairs, and baby monitors. It used data from baby registry website Babylist to determine the price increases. The findings show that new parents are facing higher prices for essential items, which can be a significant burden on their budgets.

Companies’ Responses to Tariff Policies

Some companies have said they will work to mitigate the impact of the levies and offset the costs to consumers, while others, including Best Buy and Costco, have said they already raised some prices. Walmart and Target said they plan to hike prices on some items. Baby gear sold in the U.S. is specifically at risk of tariff impact because 97% of strollers and 87% of car seats are manufactured in China, according to Babylist.

Price Increases for Specific Baby Gear

The committee’s report tracked the prices of the most popular Amazon listings for products from five of Babylist’s categories of baby goods. The Amazon bestsellers included items from brands Graco, AirClub, Summer by Ingenuity, Evenflo, and HelloBaby. The report measured the price increases over time using the price-checking websites Keepa.com and Camelcamelcamel.com. Of the five items studied, the Graco car seat saw the highest price increase, with a 44.8% increase over the measured time period.

Response from Graco Owner Newell Brands

A spokesperson for Graco owner Newell Brands told CNBC in a statement that the report appears to have started collecting data on the Graco car seat during a period when retailers were running a promotion. The spokesperson said the car seat was on sale on April 1, so the price was hiked by about $20, not by $43, as suggested in the report. Executives from Newell said during an April 30 earnings call that the company had raised prices on its baby gear by about 20%.

Broader Impact of Tariff Policies on Baby Gear

A broader Babylist analysis of 11 categories, including products like bouncers and diaper bags, found that costs increased by an average of $400 combined between March 10 and June 3. Those higher prices for new parent households in the U.S. amount to $875.2 million in total additional costs, according to the analysis and based on data from the American Community Survey. The study found particular risk for parents in California, with parents in that state collectively facing a potential $100.3 million in additional baby costs this year.

Conclusion

The tariff policies implemented by President Donald Trump have resulted in significant price increases for baby gear, making it more difficult for new parents to afford essential items. The report’s findings highlight the need for policymakers to consider the impact of tariff policies on consumers, particularly those with limited budgets. As the trade tensions between the U.S. and China continue to escalate, it is likely that the prices of baby gear will continue to rise, affecting many families across the country.

FAQs

Q: What is the main reason for the price increase in baby gear?
A: The main reason for the price increase in baby gear is the tariff policies implemented by President Donald Trump.
Q: Which baby gear categories have been most affected by the tariff policies?
A: The baby gear categories most affected by the tariff policies are car seats, bassinets, strollers, high chairs, and baby monitors.
Q: How much have the prices of baby gear increased since April 1?
A: The prices of baby gear have increased by 24%, or by $98 combined, since April 1.
Q: Which state is most affected by the price increase in baby gear?
A: California is the state most affected by the price increase in baby gear, with parents facing a potential $100.3 million in additional baby costs this year.
Q: What is the total additional cost of baby gear for new parent households in the U.S.?
A: The total additional cost of baby gear for new parent households in the U.S. is $875.2 million.

Global Trends and Politics

Amex Platinum, Chase Sapphire Get 2025 Refresh

Published

1 day ago

June 16, 2025

WORxK Global News Team

Amex Platinum, Chase Sapphire Get 2025 Refresh

Introduction to the Premium Credit Card Rivalry

The long-running rivalry between the country’s top premium credit cards is about to heat up again. JPMorgan Chase announced last week that a refresh of its Sapphire Reserve — the travel and dining rewards card that went viral when it arrived in 2016 — was imminent.

Response from American Express

In response, American Express on Monday said that "major" changes were coming to its consumer and business Platinum cards later this year. While short on details, the New York-based card company said that its update would be its largest ever investment in a card refresh. "We are going to double down on the things we know based on the data that our card members love," said Amex President of U.S. Consumer Services Howard Grosfield in an interview. "But more importantly, we’ll bring a whole bunch of new and exciting benefits and value that will far, far, far exceed the annual fee."

History of Premium Credit Cards

American Express pioneered the premium credit card space decades ago with cards that bundled perks at airlines and hotels with access to its own network of high-end airport lounges. But JPMorgan shook up the industry in 2016, igniting stiff competition among card issuers with a lavish sign-on bonus and other incentives for its Sapphire card.

Expected Changes and Updates

The expectation among industry experts is that both companies will offer ever-longer lists of perks in travel, dining and experiences, while potentially raising their annual fees, as has been the pattern with recent updates. The Platinum card has a $695 annual fee, while the Sapphire has a $550 fee. On Reddit and other forums, card users circulated rumors that JPMorgan was hiking the annual fee on its Sapphire product to $795. A JPMorgan spokesperson declined to comment.

Launch of the New Platinum Card

The new Platinum card will launch in the fall, Grosfield said. The updates from both companies are expected to further intensify the competition in the premium credit card market.

Conclusion

The rivalry between JPMorgan Chase and American Express is set to heat up with the upcoming refresh of their premium credit cards. With expected updates and new benefits, card users can look forward to enhanced perks and services. However, the potential increase in annual fees may be a concern for some users.