• The auto industry could be exempted – for now - from the U.S. administration's threatened 25-percent tariffs.
The latest threatened implementation date for the U.S. administration's 25-percent tariffs on products entering the country from Canada and Mexico (as well as 10 percent on energy) is April 2nd. There’s broad consensus that such a tariff would be catastrophic for the automobile industry and for the economies of each country.
It’s also clear to many that that fact is not news to the administration. Bloomberg reported this week that the US administration is now likely to leave the auto industry out of the tariffs for now. There’s no certainty that will be the case though, so caution is still in order.
Bloomberg also reports, citing White House officials, that the U.S. administration is still considering raising a tax on automotive products, but at a later date. We’ve seen that kind of tactic before, but it could well be a way for the White House to save face as it backs off an economically suicidal plan.
Industry players and watchers remain cautious. As reported by Automotive News, Flavio Volpe, director of the Canadian Automotive Parts Manufacturers' Association, believes that given the constant threat of tariffs other announcements, the reported news doesn’t provide much comfort.
For industries that depend on exports to the U.S., tariffs could be a severe blow. Inevitably, their customers south of the border would buy fewer products or opt for American ones.
In the meantime, as we reported last week, several auto manufacturers are preparing for April 2nd, notably by stocking up on parts before they are subject to tariffs.
The U.S. president has taken to calling April 2nd “Liberation Day”. It seems clear that some areas will be affected, especially with the threat of further, reciprocal tariffs looming. We will see if in one way or another the automotive world will be impacted.