President Donald Trump announced on Wednesday evening that tariffs on “all cars that are not made in the United States” will go into effect on April 2. Shares of several automakers declined after the announcement. Toyota pulled back more than 7%, while BMW slipped nearly 4%.
Several Wall Street analysts have expressed concern over the impact of Trump’s auto tariffs on the broader market. Trump’s previous discussions on imposing duties on countries with their own tariffs on U.S. imports were reiterated on Wednesday, with the president stating that his retaliatory tariffs will be permanent for his entire second term. “I think it’s just the almost scattershot way that trade policy is being implemented that maybe has investors on edge,” said Sameer Samana, Wells Fargo Investment Institute senior global market strategist.
“If in the next couple weeks we have a trade and tariff framework in place, and companies and consumers can start to make decisions again with some clarity, it’s possible that this was all a near-term speed bump and we start to get kind of back on track,” he added. The National Highway Traffic Safety Administration (NHTSA) keeps track of the final assembly country of all automobiles sold in the U.S., as well as the country of origin for their engines and transmissions. The Trump administration is finalizing details on how it will determine which automobiles will be subject to the 25% import tax.
Administration officials have proposed that any vehicle not assembled in the U.S. would be subject to the duties. Even those assembled in the U.S. may be taxed if they contain foreign parts, though only on the percentage of the vehicle comprising those items. Below is a summary of major makes and models with final-assembly countries outside the U.S., which could be affected by the tariffs:
– Toyota Camry: Final assembly in Japan.
Auto tariffs to affect consumer prices
– BMW X5: Final assembly in Germany. – Honda CR-V: Final assembly in Japan and Canada.
– Mercedes-Benz C-Class: Final assembly in Germany. – Chevrolet Silverado: Final assembly in Mexico. These tariffs could lead to higher prices for consumers and affect sales in the U.S. market.
Automakers are closely monitoring the situation to adjust their production and supply chains accordingly. Donald Trump has promised to impose sweeping tariffs on imported goods on April 2nd. The car industry got a preview of what is in store a week earlier, on March 26th, when America’s president announced hefty levies on imported cars and parts.
The aim is to restore carmaking to America. However, this plan comes with significant challenges. Raising prices on imported vehicles and parts is expected to hit sales and reduce choices for American consumers.
Additionally, carmakers will face reduced profits due to these increased tariffs, which could impact their ability to innovate and compete.
