President Trump views the tariff as a way to generate tax revenue, which will support his planned tax cuts and help revive domestic production in the country. He stated that the tariff would lead to the creation of many new automobile plants and provide a large number of jobs. However, the response from automakers to Trump’s plan has been mixed. Those who have already established factories in the U.S. are pleased, but for those who have not, it may become a burden.
The Canadian government has also announced plans to impose retaliatory tariffs. Canadian Prime Minister Doug Ford tweeted, "President Trump’s 25% tariff will not work, it will only raise costs for hardworking American families." According to analysis by automotive industry groups, this tariff could raise car prices by thousands of dollars, which may force automakers to reduce production and cut jobs.
Last year, the U.S. imported $474 billion worth of automobile products, including $220 billion in passenger cars. The major suppliers of these imports are Mexico, Japan, South Korea, Canada, and Germany. Cox Automotive reported that if no tariff cuts are made for imports from Canada and Mexico, the price of cars made in the U.S. could rise by about $3,000, and cars made in Canada or Mexico could increase by $6,000.
Automobile industry analysts have said that from mid-April, there will be significant disruptions in North American car production, with about 20,000 fewer cars being produced daily, and production could drop by nearly 30%. "If these tariffs continue, long-term sales will decline, the prices of both new and used cars will rise, and some models could be canceled," said Jonathan Smoke, Chief Economist at Cox.
The impact of this tariff has also been felt in the U.S. stock market, with the S&P 500 falling by 1.12%, and shares of automakers also declining. Tesla dropped by 5.6%, and General Motors fell by 3.1%.
This could present a challenge, especially for those like you working in digital marketing and business, as such economic changes can impact many companies’ operations and production processes.
