Former American President Donald Trump intends to implement a 25% tariff on car imports, which could significantly impact the global automotive industry. While it is focused on shielding American automakers from competition and minimizing the trade deficit, it has already received backlash from foreign auto manufacturers as well as trading partners . In re-issuing this statement, Trump is continuing to support his “America First” policy, which was at the forefront of his presidency.
What Caused the New Tariffs
For a long time, Trump said that foreign automobile manufacturers enjoyed an unfair edge over American manufacturers because of cheaper labor and generous government aid in nations like Germany, Japan, and South Korea. In his opinion, increasing the tariffs on foreign cars would result in greater production in the US, thus creating more jobs and stimulating the economy.
While making an address, Trump remarked, “Foreign nations have abused our auto sector for the last few decades. We are preventing this from further occurring by ensuring that our employees and businesses are reaping the benefits. We’re placing America on top.”
These policies apply a 25% tax for all vehicles imported, from EU luxury brands and Japanese automobiles, to even the China bred electric cars. This policy will initiate an increase in the price of foreign cars leading to a boom in the domestic market for American vehicles.
Automakers from Germany, Japan, and South Korea who send large numbers of vehicles to the US have expressed concern over the announcement. This has also worried many European firms, as BMW, Mercedes-Benz and VW have all claimed that the tariffs will drop their sales, resulting in higher unemployment.
Honda and Toyota have also expressed concerns regarding the tariffs as they will increase their cost of carrying out business in the US. The same applies to South Korean makers like Kia and Hyundai who depend on the US market for their exports.
China, currently experiencing a protracted trade dispute with the United States, is predicted to employ retaliatory tariffs on American imports. Such actions may aggravate the state of affairs between them and will go beyond the automotive industry affecting other trade domains too.
Responses from America
Responses to the announcement in the US have been mixed. US manufacturers of automobiles like Ford and General Motors are jubilant about the announcement as they believe it creates an opportunity for domestic production. Conversely, dealerships and customers are worried about higher foreign car prices that automakers may transfer to consumers. 바라보는 시각
Economists assert that this stance will trigger inflation in the automotive sector due to price hikes in both imported and domestically produced automobiles. Some analysts, however, think miscalculating retaliation by American trading partners can aggravate the situation damaging global trade reliant industries.
Conclusion
Tariffs set by former president Trump spend 25% on car imports for the United States, while controversial, can be considered a measure to protect American car manufacturers. The policy will likely prove to be beneficial for car manufacturers in the short-run, however, consumers will be worse off in the long-run because of trade relations capital and indirect costs rising. The effects of the tariffs set on automobiles will likely be observed in the upcoming months as countries try to negotiate with automobile manufacturers.