Hope Isn’t a Strategy: Act Now on Tariff RisksHope Isn’t a Strategy: Act Now on Tariff Risks

The delay in tariffs on Canadian and Mexican goods isn’t just a reprieve – it’s an alert for dealers. Instead of waiting to see what happens by March 1, the date President Donald Trump has set as the end of negotiations before tariffs taken effect, proactive dealers should use this window to “tariff-proof” their businesses.
If you sit back and hope for the best you could find yourself scrambling when costs inevitably rise, whether due to these tariffs or the next geopolitical disruption. That means unhappy customers who can’t buy cars, or get service, and the risk of price-gouging charges.

Let’s be real: Tariffs – or some other form of supply chain upheaval – are coming. The trade tensions between the U.S. and China have already demonstrated how quickly pricing and availability can shift. Dealers who ignore these warning signs risk being caught off-guard, just as many were during the COVID-19 supply chain crisis.

Inventory: A Critical Decision Point

One of the biggest mistakes a dealer can make right now is assuming that all vehicles will be impacted equally. That’s simply not the case. Vehicles assembled in the U.S. with a high percentage of domestic parts are likely to see the least price volatility. Meanwhile, models built overseas or with a significant share of imported components could get hit hard.

So, what’s the smart play? Dealers should analyze their inventory mixes now, before it’s too late. If a dealer’s lineup is heavily skewed toward imports, they need to start thinking strategically. Should they lean into domestic trucks instead of imported SUVs? Should they shift marketing efforts toward models that will hold steady in price? These are the types of questions smart operators should be asking themselves.

A dealership that ignores these shifts could face sticker shock when it’s time to restock the lot. And once prices rise, it will be too late to make meaningful adjustments.

Short-Term Gains, Long-Term Strategy

Beyond simply adjusting inventory, there’s a real opportunity to get ahead of potential price increases. If tariffs do take effect, vehicles already on the lot will instantly become more valuable. That means securing inventory before any tariff-related spikes is a no-brainer.

Some may argue that this is a risky move – what if tariffs don’t happen? But here’s the thing: If a dealer is already selling these models successfully, then stocking up doesn’t pose a major risk. The worst-case scenario? They sell the vehicles as usual. The best case? They’ve positioned themselves to profit when others are forced to raise prices.

Service and Parts: The Silent Threat

Tariffs won’t just impact new-vehicle prices. The service department, often the most profitable part of a dealership, could take a hit if parts costs rise.

And yet, far too many dealers overlook this side of the business when thinking about tariffs. They’re so focused on car prices that they fail to consider how rising parts costs could eat into margins. Now is the time to stock up on commonly used parts – before prices jump.

If tariffs don’t happen? The dealership has extra inventory on hand. If they do? That dealership is in a prime position to maintain margins while competitors scramble to source parts at higher prices. And that means the dealership with competitive pricing keeps, and often wins, customers.

Lessons From the Pandemic

We’ve seen this play out before. The COVID-19 pandemic exposed just how fragile supply chains are. The dealers who had inventory on hand were the ones who survived – and thrived – while others faced empty lots and long wait times.

The current tariff situation may not be identical to the pandemic, but the lesson is the same: Those who prepare will be in a position of strength. Those who don’t will be at the mercy of circumstances beyond their control.

Don’t Wait – Act Now

Dealers have two choices: They can take proactive steps to protect themselves, or they can wait and hope for the best. But hope isn’t a strategy.

The reality is that uncertainty is the only constant in this industry. Whether it’s tariffs, supply chain issues or regulatory changes, disruptions will happen. The dealers who adapt will stay ahead. The ones who don’t? They’ll be playing catch-up – if they survive at all.

The clock is ticking. Which side will you be on?