08:22 AM EDT, 06/05/2025 (MT Newswires) -- In the first full month since auto tariffs kicked into high gear at 25%, United States new vehicle sales fell 2% year over year in May to 15.7 million units annualized, noted Bank of Montreal (BMO).

The threat of tariffs pulled forward demand in March and April with sales breaking above the 17 million mark in both

months compared with the 16 million trailing 12-month

average through February, said the bank. So, tariffs have shifted sales back below recent trends.

Meanwhile, Canadian new vehicle sales held up better, stated BMO. Although the annualized figures slipped to

1.8 million units in May, purchases were still up 7.9% year over year.

Where the effects of the tariffs become more obvious is that May marks the first month of sales in 2025 that weren't on par or higher than their counterparts in 2019, pointed out the bank.

"Healthy" inventory levels have enabled automakers to largely shelter customers from the full effect of auto tariffs so far this year, and as a result, sales have held up, added BMO.

However, with pre-tariff inventory dwindling and non-USMCA auto part tariffs now also in effect, auto sales will start to weaken in the months ahead if tariffs remain in

place, according to the bank.