The White House has announced that it will temporarily lower the new tariff rates on imports on most of the United States’ largest trade partners to 10 percent for 90 days to help facilitate trade negotiations. This comes after numerous retaliatory tariffs were launched, including the 25 percent Canada has placed on automobiles built in the U.S. that went into effect earlier today.
This decision comes after President Donald Trump announced sweeping reciprocal tariffs on numerous economic partners in an effort to create more favorable terms for the United States. He said now would be the time to solidify those agreements after over 75 countries expressed an interest in bargaining, with China being a clear exception. Trump stated via social media that he would be raising the tariffs imposed on imports from China to 125 percent, due to the “lack of respect that China has shown” to the global marketplace.
This also calls into question what automakers will do in response to the 90-day reprieve. While some companies have stated that they aren’t interested in making changes in response to the tariffs, others have opted to limit their exports and even discontinue the availability of select models.
German media has reported that Volkswagen Group (including Audi) would be halting all U.S. imports while the company considers its response to the situation. Meanwhile, Toyota has said that it doesn’t want to weigh in on the situation in any official capacity. Unofficially, it has expressed a fairly strong desire to continue doing business as usual and has even informed part suppliers that it would help cover the costs associated with the tariffs for the time being.
Subaru and Mazda have also been pretty cagey on what happens next. Honda likewise doesn’t want to commit to changes prematurely and expressed concerns that shifting supply changes takes time, adding that it endorsed the idea of bringing more localized manufacturing to the United States.
General Motors (which includes Cadillac, Chevrolet, Buick, and GMC) similarly claimed that it supported the president’s goal of localizing production. But it actually produces a fair bit of vehicles outside the country so it may need to make some changes depending on how trade negotiations progress.
Nissan surprised everyone by stating that it would actually lower prices on a handful of popular models, claiming it was being done to aid customers during challenging economic times. But the brand is likely just trying to strike while a subset of the market is panic buying and wisely lowered prices on its more desirable models to sweeten the pot.
Stellantis brands (Jeep, Dodge, Chrysler, and Ram) are taking a similar approach. They’re offering employee pricing on select models to literally everyone. However, like Nissan, they need just about every sale they can get right now and a few of the models built in Canada are seeing temporary production stoppages.
Ford is also offering employee discounts to the public for the next couple of months. With the brunt of its final assembly still taking place within the United States, it’s arguably better positioned to endure tariffs than most of its competitors. But the whole of the industry is still heavily reliant on global supply chains and Blue Oval does indeed have several products built outside the U.S., so we’ll have to wait and see what it does.
BMW is hoping to cover tariff costs for vehicles built in Mexico. But it’s less clear what it plans on doing with models that have to be imported from Europe. As of now, it seems to be taking a wait-and-see approach.
Mercedes-Benz likewise plans on eating any tariff costs in the short term. No changes have been announced. That doesn’t necessarily mean it won’t be forced to make some tweaks further down the road, however.
Jaguar and Land Rover will be halting exports to the United States while the company decides what the next step will be.
Genesis and Hyundai have stated that they also won’t be raising prices for the time being. But Hyundai did end its free maintenance program and statements have been made that Genesis prices could go up in the future if the 25-percent tariffs remain in place. By contrast, Kia hasn’t said much of anything publicly — other than a desire to remain relevant in the United States for the foreseeable future.
Don’t expect to see any of the above automakers change their tunes overnight. They’ll all be too busy petitioning every government involved for favorable terms over the next couple of months. Formal statements will eventually be made as the 90-day grace period comes to an end. But most of the brands will probably wait until the last minute before issuing any official statements.
The real question will be how consumers respond. We saw an influx of panic buying after tariffs were announced and that may continue as there’s some amount of economic uncertainty still at play. However, that does not necessarily mean deals will be worse three months from now. If the broader economy stumbles, consumers won’t want to spend their money and prices could come down broadly as automakers enter into survival mode. Tariffs or not, car buyers were already bemoaning elevated vehicle pricing over the last several years. But it’s all very speculative at this juncture with tariff negotiations ongoing.
[Images: Babooo0/Shutterstock; Clare Louise Jackson/Shutterstock; Around the World Photos/Shutterstock]
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