Used car prices are surging in the U.S., driven by the volatility around President Donald Trump's tariffs.
What Happened: The Manheim Index, a metric used to track used car prices in the U.S., has surged 1.6% in June from May and 6.3% year-on-year, the single largest increase since August 2022, data shared by Cox Automotive in a press release showcased on Tuesday.
"Wholesale appreciation trends have been more volatile over Q2 as tariffs really impacted new sales and supply, which impacted the used marketplace as well," Cox Automotive’s Senior Director of Economic and Industry Insights, Jeremy Robb, said.
“Retail sales continue to run a bit hotter than prior years, and off-lease supply into the market is still on a downward path, two factors which should be fairly supportive of higher values as we move onward,” Robb said in the release.
The index has caught the eye of private economists and Fed officials in recent years, especially during the pandemic, as a marker for longer bouts of inflation.
Why It Matters: The 25% auto tariffs have had a significant impact on the U.S. auto sector, with many automakers pulling their yearly guidance due to the uncertainty and volatility in the market.
Recently, Japan's top trade negotiator, Ryosei Akazawa, called the 25% auto tariffs unacceptable for Japanese manufacturers. "We have repeatedly explained to the U.S. that Japan’s automobile industry has made an enormous contribution to the U.S. economy," Akazawa said.
However, Trump had earlier indicated that he could raise the tariffs once again in a bid to boost domestic production in the U.S. "The higher you go, the more likely it is they build a plant here," he had said. Trump recently also sent "take it or leave it" letters to 12 countries over the tariffs.
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