President Donald Trump announced a new 25% tariff on all cars and auto parts imported from outside the United States.
The new tariffs will take effect on April 2 and will apply to both finished cars shipped into the country and imported auto parts for domestically assembled cars.
The new tariffs are bad news for companies that export foreign-made cars to the United States, as they will increase the final selling price of the vehicles and will also put pressure on companies that do not have factories in the United States.
US President Trump claimed that this move will lead to “tremendous growth” in the US auto industry, adding that it will create more investment for American automakers and, consequently, more jobs.
However, economists warn that imposing tariffs on imported goods will force affected countries to retaliate, creating a global economic crisis.
The United States imported approximately eight million cars last year, representing nearly half of the total market sales. Mexico will be the country most affected by this new tax.
Automakers with production facilities in Mexico include BMW, Ford, Nissan, Volkswagen, and Toyota. Other major importers to the United States include Canada, Germany, Japan, and South Korea.
Many American automakers produce cars outside the United States and re-export their vehicles to the United States. These companies will be subject to tariffs under the new law.
Therefore, the American economy will be negatively impacted by these tariffs, just like other exporting countries.
