The U.S. administration has announced it will impose 25-percent tariffs on vehicles imported into the United States, effective April 2nd. That, of course, is if there isn't another late-minute postponement as we've seen several times this year already.
The consequences of the tariffs
If the tariffs do take effect, it will have the effect of an extremely cold shower on the auto industry and will, by unanimous opinion, have major consequences. It also represents a significant escalation in the trade war launched by the U.S. against its North American allies and trading partners, Canada and Mexico, as well as European and Asian countries.
The tariffs will have devastating effects on the global supply chains of the automotive sector, which are already shaken by other tariffs, notably on aluminum and steel.
The unpredictability and lack of clarity and long-term vision of the American administration will have major consequences on the industry. If nothing changes by April 2, we must prepare for a major crisis in the automotive industry.
Here is what U.S. president Trump had to say in his announcement, which came after markets had closed for the day:
“What we’re going to be doing is a 25 percent tariff for all cars that are not made in the United States. We start off with a 2.5 percent base, which is what we’re at, and go to 25 percent.”
The stated objective is to support production in the U.S. and to encourage manufacturers to relocate the production of their vehicles to the United States. Industry leaders and analysts have warned, however, that significant and widespread tariffs would lead to reductions in the production of new vehicles in North America, not to mention that it will significantly increase the prices of new vehicles.
At the time of writing, we do not have official reactions from industry stakeholders, but it won’t be long.