In This Story
President Donald Trump’s proposed tariffs on automakers could ripple beyond the automotive industry, with SiriusXM (SIRI+1.94%) now expressing concern about potential impacts to its subscription-based business model.
The company, which is home to radio and podcast icons like Howard Stern, Alex Cooper, and Conan O’Brien, relies on new car sales to drive subscriber growth. CEO Jennifer Witz said SiriusXM is “watching very closely” for potential fallout from the new administration’s economic policies — especially tariffs, but also broader concerns like consumer confidence and “worries about inflation.”
Witz said the satellite radio giant expected “relatively stable” new car sales at the beginning of the year, but Trump’s trade war undermined that expectation.
“It’s hard to say right now where that’s going to land,” Witz said Wednesday at the Morgan Stanley (MS-3.54%) Technology, Media & Telecom Conference. “The first two months were very strong, but again with potential tariffs going in place, it could impact the new car side of the business.”
Trump’s tariffs, which took effect Tuesday, include a 25% duty on all Mexican imports, most Canadian goods, and a 20% tariff on imports from China. A day later, however, he granted major U.S. automakers a one-month exemption from the new Canadian and Mexican tariffs. And on Thursday, he announced that Mexico will not face tariffs on any goods covered under the United States-Mexico–Canada Agreement (USMCA) trade agreement through April 2.
If and when the tariffs go into full effect — and if other countries retaliate —the cost of manufacturing new cars will rise, likely pushing up car prices and slowing sales. That could spell trouble for SiriusXM, which gets many of its new subscribers through free trials in newly purchased vehicles.
Fortunately for SiriusXM, used car sales should be unfazed by all of this. Witz noted that used cars account for 50% of SiriusXM’s trial subscriptions.
She added that the company will try to navigate these uncertainties by focusing on longer-term subscriptions and refining its pricing and packaging strategies.