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President Trump's 25 percent rates for imported vehicles, which were in force last week, are already sending Tremoren by car industry, as a result of which companies are asked to stop cars to the United States, close factories in Canada and Mexico and to dismiss employees in Michigan and other states.
Jaguar Land Rover, located in Great Britain, said it would temporarily stop exporting its luxury cars to the United States. Stellantis factories in Canada and Mexico that make Chrysler and Jeep vehicles and dismiss 900 American employees who have supplied those factories with engines and other parts.
Audi, the luxury division of Volkswagen, also paused the export of cars to the United States from Europe and told dealers to sell what they still had on their plots.
If other car manufacturers make similar movements, the economic impact can be serious, which leads to higher car prices and widespread fired. The rates for cars are among the first of various industry -specific taxes that Mr Trump has in sight and could offer early instructions on how companies will respond to his trade policy, including whether they increase prices or increase production in the United States. The president said that he also wants to burden the import of medicines and computer chips.
Applying the new rate to imported cars can increase their costs for consumers by thousands of dollars, which greatly reduces demand for those vehicles. For some Jaguar Land Rover or Audi models, the rates can amount to more than $ 20,000 per car.
Although much of the initial impact of the rates has been disruptive, Mr Trump's duties have had the intended effect in at least one case to increase production in the United States. General Motors said last week that it would increase the production of light trucks in a factory near Fort Wayne, IND.
The longer -term impact of the 25 percent rates is unclear. Many car manufacturers are still trying to find out how they can prevent the prices from no longer able to pay consumers. Investors are pessimistic. Ford Motor, GM and Tesla shares have fallen from trade in recent days.
“Everyone in the Supply Chain for Automotive is aimed at what they can do to minimize the tariff impact on their own balance sheets and prices,” said Kevin Roberts, Director of Economic and Market Information at Cargurus, an online shop site.
But car manufacturers have never had to deal with the imposition of such high rates with such little notification. Neither did they have so little insight into what the president will do below, said analysts and dealers.
“The traditional Playbook is not enough,” says Lenny Larocca, who leads the car industry team at the KPMG consultancy.
Mr Larocca predicted that car manufacturers would increasingly focus on producing larger, heavier vehicles for sport utility and pick -ups. Those vehicles, many of which are assembled into American factories, are usually the most profitable and give companies more room to absorb the costs of rates instead of passing on to customers.
Many modern assembly lines can produce different models, giving companies flexibility to go to the most profitable vehicles and to leave vehicles that don't earn so much money. Mercedes-Benz has said that it will benefit from flexible assembly lines in his factory in Alabama.
This strategy comes with disadvantages. It may be harder for car buyers to find moderately priced new cars. The average price of a new car is already almost $ 50,000.
Analysts say that this is much clear: rates will not ask companies to open new factories or to reopen closed plants immediately. Companies will not take that expensive step until they are sure that the rates are permanent and that investing hundreds of millions – or billions – of dollars in new production capacity will bear fruit.
“I have not seen any big movements,” said Mr. Larocca. “It's waiting and seeing.”
Some car manufacturers and suppliers expanded their American activities before Mr Trump took office. They often responded to the Coronavirus -Pandemie, when it became risky to rely on distant factories for critical parts. Others have made large investments in factories that make electric vehicles or EV batteries to take advantage of incentives offered by the BIDEN administration.
ZF, a German maker of parts, spent $ 500 million last year to expand a factory in South Carolina that produces transmissions for BMW and other car manufacturers. And in recent years, GM has opened two American battery factories with a South Korean partner, LG Energy Solution, to make the most important part of electric vehicles.
In the short term, some foreign car manufacturers can simply stop sending vehicles to the United States or because they can no longer make a profit or because they can earn more money elsewhere. That can be the case with Jaguar Land Rover. The company, known for the company in Great Britain in Great Britain, sells approximately one fifth of his cars in the United States.
If other companies stop selling certain models to Americans, consumers will have fewer vehicles to choose from and the remaining car manufacturers will have more leeway to increase prices.
Until now, however, the rates have not led to widespread price increases for new cars. Hyundai Motor said last week that it would not increase the proposed selling price of Hyundai and Genesis Cars until 2 June.
Of course, car dealers can increase prices, even if an car maker promises not to do that. That happened a lot during the pandemic, when shortages of computer chips and other parts limited the delivery of new vehicles.
Dealers and car manufacturers have reported a big sale in recent days because people have rushed to buy vehicles before the rates came into force. The average time that a vehicle spent to the party fell from 77 days at the end of January to less than 50 days at the beginning of April, according to Cargurus.
The question has been especially high for Japanese brands such as Honda, Subaru and Nissan, apparently because buyers assume that they are being imported, said Sean Hogan, the vice -president of Sierra Auto Group, who has a dozen dealers in South California. All three Japanese companies have factories in the United States, although they import some cars.
Another tariff shock comes on 3 May, when the Trump administration will apply rates to car parts. This means that even cars made in the United States are affected because almost all vehicles contain components from abroad. Repairs are also becoming more expensive.
“The trained audience definitely makes some movements to lead the rates, which I think is smart,” said Mr. Hogan.
But the long -term impact of Mr Trump's trade policy is still impossible to predict, he said. “This administration is moving quite quickly and you really don't know what will happen,” added Mr. Hogan to it. “Belts fixed.”
Neal E. Boudette And Melissa Eddy contributed reporting.
