Automotives: How are they influenced by duties

One day after US president Donald Trump He said he would hit foreign cars and car spare parts with a new 25%import tax, many of the world’s largest automakers appeared to be stunned and silent,

This decision by the US president is expected to cause chaos throughout the industry.

Automakers in the… red

Investors sold automakers in Japan, Germany and the United Kingdom on Thursday. Toyota, BMW and Jaguar Land Rover saw their shares being sold out, which means loss of many billions of euros.

Companies in America were one of the toughest affected, with General Motors falling over 7%, According to the BBC.

Tesla’s shares, known for its US factories and whose boss, Elon Musk, is one of Trump’s largest donors and closest advisers, have been remarkably escaped by the blow, closing the day steadily.

But Musk warned that even his company would not be unaccountable with the inconvenience of duties.

« It is important to note that Tesla is not unhappy here, » Musk wrote on social media. « The impact on cost is not insignificant. »

Tesla’s Model Y, which is at the top of the Cars.com 2024 American car construction for the third consecutive year, only supplies 70% of its US components, according to Patrick Masterson, head of the list.

« The most important conclusion that I think people need to know about this is that no vehicle is 100% American, » he said.

« The consumer will feel this in all areas and I really don’t think any automaker will escape it, including Tesla. »

From $ 4,000 to $ 12,000 the increases in cars

The latter duties could affect imports of approximately 300 billion – $ 400 billion, depending on which parts are affected by the mandate. This accounts for almost 10% of all the US brings to the country every year.

They are expected to raise prices by about $ 4,000 to $ 12,000, depending on the vehicle.

Many large automakers operate in the US while importing models or spare parts from countries outside the US.

Japanese Toyota, for example, has 10 production plants in the US and its SUV Highlander ranks high on the list of American cars.

But her prius comes from Japan.

General Motors also brings important components and cars from Korea and Mexico, which is largely based on Volkswagen, despite assembled SUV Atlas in the US.

Some companies may be able to redirect work in factories in the US, Oxford Economics have proposed, but warned that such a move is likely to lead to higher prices and « significantly lower production in the main commercial partners in the US ».

Impact on jobs as well as jobs

The action is likely to have a major impact on the automakers exported from Germany and the United Kingdom, which are known to sell fewer, more premium and luxurious brands at higher prices, such as Jaguar Land Rover, Mercedes-Benz and Audi.

Ferrari, which sends its cars from Italy, immediately announced prices by 10%to help cover the new duty costs

As companies are forced to respond to 25%duties, increasing prices or accepting lower profits, some may decide to completely withdraw certain models from the US, leading to fewer options for US consumers, warned Patrick Anderson, Managing Director.

This could also lead to automakers that do not today have a large construction presence in the US, such as Jaguar Land Rover or Porsche, reduce production in their countries, potentially affecting jobs.

All Mitsubishi cars sold to the US are imported, while Hyundai, which announced a factory -based plans in the US earlier this week, sends most of South Korea’s cars.

When do they start

The White House said car duties will begin on April 3, and duties for certain car accessories will come into force a month later.

At present, accessories manufactured in Mexico and Canada – which traditionally enter the US under a free trade agreement – will escape, while officials are preparing customs systems.

The exception to the accessories from Mexico and Canada, which, as the White House said, would be temporary, has been relieved for some in industry.

But General Motors is still facing a possible increased cost starting at about $ 10.5 billion, according to JP Morgan.

Ford’s account would start at about $ 2 billion, more than doubled over time, as duties on spare parts will come into force, according to estimates by the bank giant. He said the additional costs across the industry would amount to more than $ 80 billion.

Higher prices, fewer sales …

Jennifer Safavian, president of Autos Drive America, who represents international automakers, said that its members are still working on the impact of this movement and other recently announced duties.

But he warned that the measure would lead to higher prices, less sales and less production throughout the industry.

« They’re trying to digest this, » he said. « But again there is no doubt that these duties will have an impact on the American automaker. »