The decision of the President Donald Trump to express a tariff of 25% on all imports coming to the United States from Canada and Mexico will touch thousands of products by a dozen industries. But they are expected to ceive on the American car industry, adding thousands of dollars to the cost of each new vehicle – with potential consequences, including contribution to higher prices, and even cross-cuts production of jobs.
With millions of auto parts and vehicles flowing between Canada, Mexico and the US, tariffs are assessed to increase the cost of producing most vehicles in North America for 4,000 to 10,000 dollars, according to Anderson Economy Group. Even vehicles composed in the United States face higher costs, as their parts import from Canada and Mexico and will be subjected to new tariffs.
“If I was a consumer and I had a look at a particular vehicle and I found him in the inventory, I would buy it now because the price could be significantly higher in just a month,” said Patrick Anderson, the Head of the Anderson Economy Group.
At least some of these major costs are likely to be transferred to consumers, he said, because car manufacturers are already working on relatively thin margins. Car prices are in a record high, having Increased 34% Since 2019. To an Average selling price from Almost $ 50,000. Used car rates could also be increased if the supply of old car falls because they attend larger prices More Americans to put down the upgrade of his vehicle.
Vehicles and their parts have free running between Canada, the USA and Mexico for decades, because the car for the car for a car became deeply intertwined. Cars made in the US contain parts from Canada and Mexico, while American parts are used in cars collected across the border and later Dispatched for sale to US consumers.
“The parts travel back and forth very freely, and that is only part of the parliamentary process of the vehicle,” said Fioran himself, a car industrial analyst on automatic solution. “The supplier in Ontario can provide parts to the factory in Michigan or Ohio and vice versa. Thus the business plan has developed in the last half century or more.”
Trade secretary Howard Lutnick disputes the term that the tariffs would lead to higher consumer prices in the interview on Tuesday at CNBC.
“Tariffs don’t, they don’t cause inflation,” Lutnick said. “One product can be more expensive and one product could be cheaper. The most taxes are in the world, and they have no inflation. There are no inflation. There are only inflation. There are not only people who are truthful. The fact is that we must protect America.”
Trump said that in part puts tariffs in a place to press the countries to stop undocumented immigrants and fentanil from entering Now over their boundaries. More than 107,000 people died from drug overdose 2023. year, according to drug execution administration, With score 70% of these deaths from opioids, including Fentanil. Almost all of the 21,900 kilograms of Fentanila seized 2024. in the southern border, with only 43 kilograms of Fentanila seized on the northern border, according to the data from customs and border protection.
But Trump also said the tariffs would encourage companies to move production from Canada and Mexico to the US in the post on social media Tuesday, the trump card wrote, “If companies move to the United States, there is no tariff !!!”
Moving more vehicle production to the US could take years and come with higher costs for work, materials and health – all factors that could contribute higher prices for car customers.
“One reason that many of them tried to move to Mexico is much cheaper, the costs of the environment are also the cost of environmental protection,” said the issue of health care, “said Aaron Bragman for cars. “It’s not a cheap thing for these car manufacturers to work and return to the consumer at the end of the day, whatever cost is transmitted.”
For car arbor, higher costs than tariffs could ultimately lead to larger prices that could cause consumers to delay purchases. This would, in turn led to a decline in new car production and ultimately decrease in business, Bragman said.
“If people stop buying cars because they are too expensive or start delaying these purchases, because they become too expensive that means cutting in production, it means they don’t need so many people who work in plants,” Bragman said. “And that has a typing effect. If you start seeing plants that do not hire people, local communities begin to be affected.”
The United Auto Workers, who have long ago opposed to Free Trade Agreement with Canada and Mexico said in a Tuesday statement that supported Trump The latest actions on tariffs, which is called “a powerful tool in the toolboxes to cancel the injustice of anti-worker trade agreements.” (Syndicate earlier Criticized by Trump Tariff plans earlier in his administration.)
“We are glad to see the American president to take aggressive actions about the completion of the free trade catastrophe that fell as a bomb on the working class,” the statement said. “There were a lot of talk about these tariffs” interfering “economics. But if the corporate America chooses the price – the American consumer or attack of the American worker, because they do not want to pay for their fair share, corporate America records that decision.”
However, car manufacturers warn that the tariffs could eventually evaluate their supply chains. Ford CEO Jim Farley warned last month that the threat of tariffs was created by chaos in the car industry and could have devastating consequences for American car manufacturers.
“Let’s be a real honest, long-term, tariff by 25% through Mexico and Canadian border will blow a hole in the American industry we have never seen,” Farley said in the conference of investors last month.
In Livonia, Michigan, Alphaus, which makes up more than 200 million car parts per year for US arcadors, is engaged for higher costs as a tariff withdrawn in their supply chain.
While parts of the company are made in Michigan, some components for those parts, such as steels or wires, come from Canada. The company is also brooded in the Assembly of Plants in Canada and Mexico and buys some of its tools from Canada. Some suppliers have already informed that their prices would be created as a result of the tariff.
“I can’t imagine the tsunami that it will be under these costs,” Alphaus said President Chuck Dardas. “We will come to us, then we will have to deal with the team. These suppliers we have, unfortunately, if we don’t do it the way they will stop delivering us, and the last thing we will do is release our customers.”
High prices for auto parts and vehicles could also increase car insurance costs if insurers must pay more for repair parts and replacement of the vehicle, according to AN analysis S & P Global. The Progressive Director General of Tricia Griffith said at the conference call on Tuesday that the insurer is careful after the way the tariffs will affect prices and preparations for adjustments for higher costs.
2025-03-04 22:56:00
