25 percent of President Trump’s tariffs on imported vehicles that came into force last week are already sending tremor through the automotive industry, which made the company stop transporting cars to the United States, close factories in Canada and Mexico, and release workers in Michigan and other countries.
Jaguar Land Rover, based in Britain, said he would temporarily stop exporting his luxury cars to the United States. Stellantis ICED Factories in Canada and Mexico, produced by Chrysler and Jeep and released 900 US workers who supplied these factories to engines and other parts.
Audi, the luxury Division of Volkswagen, also suspended the export of cars to the United States from Europe and told the sellers to sell everything they still had on their land.
If other car manufacturers are performing similar movements, the economic impact could be serious, leading to higher car prices and expanded dismissal. Car tariffs are among the first of the several industries that Mr. Trump has in their monuments, and could offer premature traces of how businesses respond to its business policy, including whether they increase prices or increase production in the United States. The President said he also wanted to tax the imports of drugs and computer chips.
The use of a new tariff on imported cars could increase its consumer costs by thousands of dollars, which will sharply reduce the demand for these vehicles. On some Jaguar Land Rover or Audi, tariffs could be more than $ 20,000 per car.
While most of the initial impact of tariffs was disturbing, at least in one case, Mr. Trump’s intended effect on increasing production in the United States had the duties of Mr. Trump. At the end of last week, General Motors said it would increase the production of light trucks at a factory near Fort Wayne, Ind.
The longer -term impact of 25 % of tariffs is unclear. Many cars are still trying to figure out how to avoid raising prices so much that consumers can no longer afford new cars. Investors are pessimistic. Ford Motor, GM and Tesla have dropped trading in recent days.
“Everyone in the automotive supply chain is focused on what they can do to minimize the tariff impact on their own balance sheets and prices,” said Kevin Roberts, director of economic and market news at Cargurus, online shopping.
But car manufacturers have never had to deal with the storage of such high tariffs with such a small warning. Analysts and sellers did not have few insights into what the president would do next.
“The traditional book is not enough,” said Lenny Larocca, who leads the automotive industry in KPMG.
Mr. Larocca predicted that automakers are increasingly focusing on the production of larger, heavier sports vehicles and pickups. These vehicles, many of which are assembled in US factories, are usually the most profitable and give companies more space to absorb tariffs than to hand them over to customers.
Many modern assembly lines are able to produce several models and give companies flexibility when switching to the profitable vehicles and leave vehicles that do not earn so much money. Mercedes-Benz said he would use a flexible assembly line at his factory in Alabama.
This strategy comes with disadvantages. It can be harder for car buyers to find new affordable new cars. The average price of a new car is almost $ 50,000.
Analysts say it is very clear: tariffs will not get society to open new factories or immediately reopen closed plants. Companies will not take this expensive step until they are sure that tariffs are permanent and that investing hundreds of millions – or billions – dollars in the new production capacity is worth it.
“I didn’t see any big moves,” Mr. Larocca said. “Waiting and see.”
Some car manufacturers and suppliers expanded their US operations before Mr. Trump joined the office. They often responded to the pandemic of Koronavir when it became risky to rely on distant factories for critical parts. Others have made large investments in factories that produce electric vehicles or EV batteries to use the incentives offered by the biden administration.
ZF, a German manufacturer of parts, spent $ 500 million last year to expand the factory in South Carolina, which produces broadcasts for BMW and other car workers. And in recent years, GM has opened two American batteries with a South Korean partner LG Energy Solution to create the most important part of electric vehicles.
In the short term, some foreign car manufacturers can simply stop sending vehicles to the United States, either because they can no longer make a profit or because they can make more money elsewhere. This may be the case of Jaguar Land Rover. The company known for luxury sports utility vehicles in Britain sells about one fifth of its cars in the United States.
If other companies stop selling certain models to Americans, consumers will have fewer vehicles to choose from and the remaining car manufacturers will have more freedom to raise prices.
So far, however, tariffs have not led to an extensive increase in prices for new cars. Hyundai Motor said last week that it would not increase the retail price of Hyundai and Genesis by June 2.
Of course, car dealers can increase prices, even if the automaker is committed. This happened a lot during the pandemic, when the lack of computer chips and other parts reduced the supply of new vehicles.
Traders and automakers have reported a brisk sale in recent days because people rushed to buy vehicles before the tariffs manifested. The average time that the vehicle spent on the plot dropped from 77 days at the end of January to less than 50 days in early April, according to Cargurus.
Demand was particularly high for Japanese brands such as Honda, Subaru and Nissan, apparently because buyers assume they are imported, Sean Hogan, vice president of Sierra Auto Group, who owns a dozen sellers in South California. All three Japanese companies have factories in the United States, although they import some cars.
Another tariff shock will come on May 3. This means that even cars produced in the United States will be affected because virtually all vehicles contain parts from abroad. Repairs will also be more expensive.
“The educated public certainly takes some steps to get in front of the tariffs, which I think is smart,” said Mr. Hogan.
However, Mr. Trump’s long -term impact is still impossible to predict, he said. “This administration is moving quite quickly and you really do not know what will happen next,” added Mr. Hogan. “Fill in.”
Neal E. Boudette and Melissa Eddy contributed by reporting.
