WASHINGTON, D.C. – President Trump’s plans to implement 25 percent tariffs on goods imported from the United States’ neighbors to the north and south – Canada and Mexico, respectively – which were slated to go into effect on February 4 have been placed on hold for the next 30 days after agreements were reached with the two nations in an attempt to avoid an all-out trade war. A 10 percent tariff on imports from China, however, was not postponed and went into effect this week.
That said, experts are looking into how the tariffs on China – and the ones on Canada and Mexico, if they eventually go into effect – could impact the U.S. car market, as cars and trucks – as well as automotive parts – would likely be heavily hit, which in turn would drive up costs for the automotive industry and consumers alike.
A 25 percent tariff could result in U.S. car and truck prices skyrocketing, given the fact that many of the vehicles in the nation are built in Mexico or Canada; it could also lead to certain models being discontinued if demand drops due to excessively high prices.
Also, experts say, the cost of automotive parts could go up as well and supply chains could ultimately become disrupted, which would affect the ability of U.S.-based automakers to assemble vehicles and could potentially lead to American workers being laid off.
General Motors is one American automaker that relies heavily on Mexican facilities to assemble their vehicles, utilizing plants in cities such as Ramos Arizpe, San Luis Potosí, and Silao; GM also utilizes a plant in Oshawa, Ontario, Canada for its Silverado model.
Ford uses Mexican plants in Hermosillo and Cuautitlán Izcalli, a Canadian plant in Ontario, and their Mach-E model is assembled in China. Stellantis, the parent company of Ram, Dodge, and Chrysler, also utilizes multiple plants in Canada and Mexico to manufacture their automobiles.
In addition, many foreign and luxury automakers – such as Toyota, Honda, Mercedes-Benz and BMW – also rely on Mexican and Canadian plants to built vehicles for the U.S. market, and likewise these brands could be heavily impacted by tariffs as well.
It is hopeful that the Trump Administration will be able to hammer out deals in the next 30 days with the governments of Mexicoa and Canada – who have promised potential retaliatory tariffs on American imports – to avoid an all-out trade war, which would likely be detrimental to all involved.
Christopher Boyle is an investigative journalist, videographer, reporter and writer for SEARCHEN NETWORKS® as well as other independent news and media organizations in the United States. Christopher works on a wide variety of topics and fields, has been featured in print and online in a variety of publications, from local to national, and helps keep a keen-eye on what’s happening in the automotive world for Auto Buyers Market.