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Costlier Car Repairs Coming as Retailers Pass On China Levy Hit

Costlier Car Repairs Coming as Retailers Pass On China Levy Hit

(Bloomberg) -- Auto-parts retailers are warning higher costs may be ahead for American consumers following the Trump administration’s latest round of tariffs on Chinese goods.

Advance Auto Parts Inc. has been able to pass on the expense of existing tariffs without hurting sales, as reflected by its better-than-expected earnings report on Wednesday. The retailer expects to be able to keep passing those costs along even with the latest duties on $300 billion worth of Chinese goods.

“Without a doubt the 25% of tariffs for this round is a meaningful increase on to our customers, but the industry historically has been able to pass on these increases,” Bob Cushing, an Advance Auto Parts executive vice president, said on an earnings call. The Roanoke, Virginia-based company’s shares surged as much as 6%, the biggest intraday jump since Nov. 13.

The comments echoed what AutoZone Inc. Chief Executive Officer Bill Rhodes told analysts Tuesday after posting quarterly sales and earnings that beat estimates.

“Let me be the first to say, we are not pleased about the tariffs,” Rhodes said. “We are concerned about what that will do not so much to AutoZone or our business, but more to what it would mean to the U.S. economy. But we have a strong history of being able to say, OK, we can pass those on to our customers.”

AutoZone rose as much as 0.8% Wednesday after climbing 5.6% Tuesday.

To contact the reporter on this story: Gabrielle Coppola in New York at gcoppola@bloomberg.net

To contact the editors responsible for this story: Craig Trudell at ctrudell1@bloomberg.net, Chester Dawson, Kevin Miller

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