The automaker can respond to the new 25 percent of President Trump’s tariffs to imported cars and parts in several ways. But everyone costs money and lead to higher car prices, analysts say.
Manufacturers can try to move production from countries such as Mexico to the United States. They can try to increase the number of cars that are already doing here. They may stop selling imported models, especially those that are less profitable.
But anything will be decided by car manufacturers, buyers can expect to pay more for new and used vehicles. Estimates differ very much and depend on the model, but the increase could range from approximately $ 3,000 per car in the United States to more than $ 10,000 for imported models.
These numbers do not take into account other tariffs that Mr. Trump said that next week will announce countries that store tariffs on American goods. He also stated that he would increase tariffs if business partners, such as Canada and the European Union, increase the tariffs in response to his automotive tariffs, leading to a growing trade war.
“It will be disturbing and expensive for American consumers,” said Michael Cusumano, professor of management at MIT Sloan School of Management.
Mr. Trump has long -term contaminated tariffs. However, many executives hoped that his threats were a negotiating tool. Mr. Trump interrupted these hopes on Wednesday when he said in the White House that tariffs were “100 percent” permanent.
Mr. Trump framed tariffs as a way to bring car production back to the United States. United Automobile Workers Union has agreed that car cars can reopen plants in places such as Lordstown, Ohio, or expand production in cities like Warren, Mich.
“Now it is on cars, from the big three to Volkswagen and further to bring good trade union to the US,” said Shawn, President UAW, with reference to General Motors, Ford Motor and Stellantis, owner of Chrysler, Jeep and RAM.
However, the relocation of factories is costly and time consuming. Car creators usually need at least two years to create a new assembly line and ensure that the vehicles that create meet quality standards. To fully avoid tariffs, they would also have to move devilishly complicated supply chains, which often include suppliers to dozens of countries.
The tariffs could encourage society to choose places in the United States instead of Mexico or Canada, considering where to expand production or build a new model. However, the selection of the site for tariffs, not because it is the most effective place for production, would achieve costs for consumers.
Some companies may hesitate to decide hundreds of millions of dollars because they fear that Mr. Trump, despite reassurance, can change his mind. Or another president could reverse his tariffs.
“What we hear from many clients is:” How do we justify that capital expenditures without knowing whether it is a long -term process? ” “You make this investment and two years for saying,” Never mind. “”
Creators of cars, several of which have refused to express themselves, are likely to avoid handing on all costs of consumer tariffs. If the prices increase too much, sales could penetrate, which would lead to a deadly spiral to sinking income and rising costs. Economists are afraid that the financial disturbance of the tariffs could help cause a recession.
Some car manufacturers have been to supply parts and finished cars before the tariffs are filmed, but this will only keep prices for a while.
“The tariffs are just making people to pay more for cars and people buy fewer cars,” said WC Benton, professor of operating and supply chains at Ohio State University.
New cars are out of the reach of many Americans – the average selling price these days is more than $ 48,000. The prices of used cars are expected to rise, as they did during the pandemic, because more buyers are looking for affordable options.
Most cars are not extremely profitable and have a limited financial room on the maneuver. General Motors, which is one of the profitable companies, had a net profit of 3.2 percent last year. As a result, car manufacturers will have to pass most of the cost of tariffs to their customers.
If so, tariffs could add $ 15,000 to the RAM of the RAM 1500, nearly $ 12,000 per pickup Toyota Tacoma, $ 9,000 on the Subaru Forester SUV and $ 6,000 per sedan Nissan Sentra, according to ISEECARS, an online site to buy a car.
Some car manufacturers are already raising prices. Ferrari, whose Italian sports cars sell hundreds of thousands of dollars, said on Thursday that on some models in response to tariffs will increase prices by 10 percent.
Automobile cars can stop selling some less profitable models that tend to be smaller and more affordable. They will promote domestic cars and trucks, many of which are larger and more expensive. All car manufacturers, including foreign brands such as Mercedes-Benz, BMW, Volkswagen, Honda and Toyota, have large factories in the United States.
However, no cars will be free from tariffs because they all have components produced abroad, which usually represent at least a third of the vehicle. According to Trump’s administration, this part will be subjected to 25 % of the tariff.
“There is no such thing as an American car,” said Simon Geale, executive vice president of Proxima, a consulting company that advises companies in the field of public procurement.
Some car manufacturers can avoid major changes in their operations in response to tariffs and bet that the consequences will be so serious that the Trump administration will have to support.
“There will be incredible will from American consumers,” said Mr. Cusumano of Mit “I hope there will be some answer.”
Ana Swanson The report contributed.
