President Donald Trump announced 25 percent tariffs on imported cars on Wednesday afternoon.
These tariffs would apply to “finished” cars being shipped in from overseas — including vehicles built overseas by American brands. They would also apply to trucks.
According to The New York Times, nearly half of vehicles sold in the country are imported.
As we’ve noted before, vehicles sometimes cross the borders between the U.S. and Canada or Mexico multiple times during production, and even vehicles built in America use components shipped in from Canada, Mexico, and sometimes, overseas.
It’s unclear if these tariffs will apply to components shipped in from overseas. Trump, of course, has enacted 25 percent tariffs on imported steel and aluminum.
From the Times:
“This is very exciting,” Mr. Trump said during remarks from the Oval Office. He said he would sign an executive order “that’s going to lead to tremendous growth in the automotive industry.”
Trump’s intent is to bring manufacturing back to the U.S., but as noted, it takes time for automakers to shift production from overseas to American plants or to build new plants in the United States.
Indeed, while the president believes this will lead to growth, economists believe that the moves could scramble carmaker supply chains, cause automakers to pull back on investments, and raise car prices (both new and used), significantly.
There may also be push back from European countries like Germany and Italy, as well as Asian countries such as South Korea and Japan, given that many cars sold in the U.S. are built in those countries.
Wall Street is not happy, with the S&P 500 dropping about 1 percent and most automotive company stocks sliding 2 percent.
[Image: Andrew Harnik/Shutterstock.com]
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