The United States imposed 25 percent tariffs on imported auto parts on Saturday, which could highly increase prices for new and used vehicles as well as repair and insurance.
President Trump is the latest tariff as part of a plan to develop domestic production in March, which comes after 25 percent tariff on imported cars that effective in early April.
The responsibilities of these second rounds will have a wider impact on the imported parts because even in the United States, cars in the United States often have engine, infection, battery or other ingredients produced in other countries.
The administration said on Tuesday that the purpose of the tariff was to “encourage the production of domestic automobiles and protect national protection by reducing American dependence on foreign automobiles and their parts.”
These products will not apply to the elements from Canada or Mexico until the North American trade agreement is met for the first term of Mr Trump. Among other issues, this agreement requires that the minimum percentage of auto parts content came from North America.
The administration also says that the imported auto parts will not be subjected to other tariffs like aluminum and steel. And the companies that have made cars in the United States will be exempted from two years from paying a portion of the tariff for the imported parts of the United States.
Mr. Trump’s tariffs have already raised the price of new cars as customers came to the dealership to buy the car before the Levira came into effect. The tariffs are impacting the use of the vehicle used in the vehicle because more people look for affordable options for new cars, raising demand and prices.
The tariffs on new auto parts are expected to increase the cost of repair and insurance premium, as the replacement parts will become more expensive. Raising the price of the car will contribute to the overall inflation, which Mr. Trump promised to bring down.
The President emphasized that the tariffs would bring back production to the United States. But even though that policy is successful, customers will still pay more for cars. Many products, including a lot of auto parts, are often made cheaply in China, Mexico or other countries outside the United States.
Ford Motor’s Chief Executive Jim Farley told CNN this week, “Fastener, washer, carpet, cable weavers are not only available – we can’t even buy these parts here.”
Automaker and suppliers say that it will take years to transfer their assembly lines. And because of uncertainty about the direction of trade principles, they are less likely to commit domestic production billions of dollars.
Mr. Trump has often changed his mind about the size of the tariff and how to apply them. On Tuesday, he amended several rules to allow automackers to avoid paying tariffs in a section of the imported elements for two years. These steps provide some relief to the industry, but the price of the car will still increase thousands of dollars, analysts say.
Will be unexpected side effects. Financial stress can take some supplier out of the business, creating a shortage of parts.
“Auto suppliers are already on a thin margin,” said Leni Larokka, a US motor vehicle leader of the consulting agency KPMG. “They couldn’t afford the full expenditure of 25 percent of the tariff.”
Mr. Trump’s decision to exempt many parts from Canada and Mexico, however, will reduce the burden on some companies.
The auto industry appoints about 5 percent of the gross domestic product in Mexico and about one million people in the country. Vehicles and parts are the largest exports to Mexico in the United States so far.
At a function with business leaders and diplomats on Wednesday, Mexico’s economics minister Marcelo Ibard said, “The smoke is clearly clearing.” What we are going to deal with is a situation that many people expect to do is not as much. “
In Canada, however, many parts manufacturers supply car factories in the country, said Flyvio Volop, president of the Automotive Parts Manufacturers Association. And the vehicles that make these trees still hit the tariff while exporting to the United States.
“There is a bunch of health in the Canadian Auto Parts Sector that we can supply locally,” Mr. Volop said.
On Friday, General Motors reported that it was removing the third shift on a pickup truck assembly line in Ontario Oshawa because of the tariff. The plant will now build more trucks for Canadians, the company said. Unifor said that the decrease would remove about 700 union jobs, and perhaps part manufacturers could leave more than 525 people.
Prime Minister Mark Carney said that GM’s decision was a “horror expression” of the economic crisis that Mr. Trump’s tariffs created for Canada.
The tariffs will hurt some Carmaker more tightly than others. Tesla and Ford are somewhat less vulnerable. Tesla produces all cars sold in the United States in California and Texas. Ford says it produces about 5 percent of the vehicles sold in the United States in the country, including F-Series Pickups, the best salesman in the country.
Analysts say that General Motors will be more damaged, as the imported parts are often more than half of the United States -made chevrolets or cadilacs. GM also imports cars from Canada, Mexico and South Korea.
Analysts say there is a factory in South Carolina, but using many parts from China, Volvo cars will also be strictly hit, analysts say.
Even vehicles in the United States will feel pain. Rivian produces electronic pickups in Illinoi, but imports batteries from South Korea and China, which will be subject to tariffs.
The tariffs are expected to shrink the supply of less expensive vehicles. According to Cox Automotive, about 80 percent of vehicles such as Honda Civic, Toyota Corolla and Chevrolet Tracks will be subject to about 80 percent of the 25 percent tariffs on 25 percent tariff.
The prices of the cars are probably not the heavens immediately, as most car manufacturers and their dealers have a huge list of cars produced before the tariff is effective. Ford, Hyundai and Volkswagen are among the car makers who say they will not raise prices for several months. However, the carmakers are not profitable enough to absorb the increased cost of tariff indefinitely.
Administration officials continue to discuss tariffs with the automackers and the duties may change. However, uncertainty is creating a huge headache for car makers. GM said Thursday that the tariffs this year will spend $ 5 billion for it. Investors have told investors that they cannot make reliable prophecy about sales and profits for 2025, such as Stelantis and Mercedes-Benz.
Ian And Emiliano Rodriguez Mega Reporting contributions.
Leave a Reply