For the first time since the global financial crisis, car sales are experiencing a sustained slowdown.
In the last eight years, car sales have grown by an average of 5% per year, but in 2018 that rate is expected to slow to a mere 1.8% over 2017. The Wall Street Journal attributed the shift to global uncertainty over Trump’s trade policies, which are undermining consumer confidence, raising prices on raw materials, and creating new barriers to the import and export of vehicles.
It’s a bad time for sales to be down. Softening demand in Europe and China and flat demand in the U.S. comes as the Trump administration’s new tariffs have led to higher prices on steel and aluminum and car manufacturers are grappling with higher emissions standards in Europe and China. Those adjustments are costing companies tons of money as they invest in R&D and adapt to the market.
But there may still be time to save the car market from an all-out decline. Trump’s announcement of a new trade deal with Mexico on Monday may be a sign that the administration is starting to resolve trade disputes and re-introduce certainty and lower trade barriers into the market. However, an escalation of tariffs in China and Europe along the lines Trump has promised could send the market plummeting.