How will car manufacturers affected Trump’s imposed cars

The statements of US President Donald Trump about imposing a 25% rate for imported cars and parts shocked much of the global automotive industry, causing an immediate reaction to investors and companies in this sector. Many of the largest car manufacturers, including Toyota, BMW and Jaguar Land Rover, have registered significant decreases in the value of shares, while American companies were not exempted from the impact of tariffs.

Following the announcement of March 27, the actions of car producers in Japan, Germany and the United Kingdom suddenly dropped, losing billions of dollars. Among the most affected companies were Toyota, BMW and Jaguar Land Rover. General Motors (GM), one of the largest car companies in the United States, has registered a decrease of over 7% of shares, and Tesla, known for its US factories and for close ties, was not immune to the effects of tariffs. Although Tesla actions have closed the stable day, Elon Musk, CEO of the company, warned that Tesla will also feel the impact of tariffs, mentioning on social networks that « the impact of costs is not a negligible one. »

The new measure of President Trump could affect imports of $ 300-400 billion, depending on the car parts included. This could lead to increasing the sale prices of vehicles by $ 4,000 – 12,000, depending on the model. Manufacturers of car business will be the most affected, especially those in Germany and the United Kingdom, who sell premium and luxury brands such as Jaguar Land Rover, Mercedes-Benz and Audi. Ferrari, for example, has already announced a price increase of 10% to compensate for the impact of tariffs.

In addition, measures could cause some companies to withdraw certain models on the American market, which would reduce the options available for consumers. Patrick Anderson, CEO of Anderson Economic Group, warned that producers who do not have a great production presence in the US, such as Jaguar Land Rover or Porsche, could reduce production in their origin countries, which would affect jobs.

The US industry, which includes both local producers and foreign companies with factories in America, is already in an uncertainty. For example, Toyota has 10 factories in the US and has important models, such as Highlander SUV, which are locally produced, but also models, such as Prius, which are imported from Japan. In turn, General Motors imports components and cars from Mexico and Korea, and Volkswagen is based on imports for some of its models.

This new round of taxes is only a part of a larger series of economic measures imposed by the Trump administration, which also includes 25% rates for a series of imported products from China, Canada and Mexico. These measures, which are already in force or are to be implemented, are supported by Trump as a method of stimulating domestic production, but also as a way to correct the US trade balance.

Some analysts, such as Oxford Economics, suggest that some companies could move some of the US production to avoid tariffs, but this could lead to prices and lower production in US partner countries. Also, the impact on the industry will be felt differently depending on the type of vehicles and parts involved in the production and import process.

For the moment, some products in Mexico and Canada will be temporarily exempted from rates, which is a small break for the North American industry. However, in the long term, Trump’s measures are expected to increase the costs significantly, reduce sales and decrease production throughout the global supply chain.

Jennifer Safavian, the president of the car drive America, who represents the international car producers, said that the auto industry is still analyzing the implications of new measures, but stressed that the effects will be clearly felt by increasing prices, lowering sales and reducing production.

In a already fragile global economic climate, the US tariff measures could even more complicate the economy process and could cause significant changes in the landscape of the world car industry.