Mexican Media Brands
25% Import Tariff Could Cut U.S. Car Sales by 2 Million Units
If President Donald Trump follows through with his threat to impose a 25% tax on all imported cars, the U.S. car market could lose 2 million sales annually.
#economics
Share
If President Donald Trump follows through with his threat to impose a 25% tax on all imported cars, the U.S. car market could lose 2 million sales annually, LMC Automotive predicts.
Jeff Schuster, LMC’s president of the Americas and global forecasting, tells Bloomberg News the hit to annual sales would drop to 1 million units if carmakers opt to absorb half the cost of the tariffs rather than pass them along to buyers.
Domestic carmakers, who have enjoyed a seven-year run of booming sales, aren’t asking for protection. But last month Trump ordered the U.S. Dept. of Commerce to assess whether the levy can be justified on national security grounds. He used the same argument earlier this month to rationalize import tariffs of 25% on steel and 10% on aluminum.
In both cases, Trump aims to use the levies to pressure other countries to lower their own import taxes on cars and other goods.
Schuster says higher prices caused by an import tax on cars could prompt consumers to postpone their purchase, turn to the used-car market or buy a U.S.-built vehicle—perhaps one made locally by a foreign brand.
About 36% of all passenger vehicles sold in the U.S. today are imported, according to Autodata Corp. Foreign carmakers locally assemble more than 60% of the cars they sell in the U.S.
RELATED CONTENT
-
On Global EV Sales, Lean and the Supply Chain & Dealing With Snow
The distribution of EVs and potential implications, why lean still matters even with supply chain issues, where there are the most industrial robots, a potential coming shortage that isn’t a microprocessor, mapping tech and obscured signs, and a look at the future
-
Mazda, CARB and PSA North America: Car Talk
The Center for Automotive Research (CAR) Management Briefing Seminars, an annual event, was held last week in Traverse City, Michigan.
-
China and U.S. OEMs
When Ford announced its 3rd quarter earning on October 24, the official announcement said, in part, “Company revenue was up 3 percent year over year, with net income and company adjusted EBIT both down year over year, primarily driven by continued challenges in China.” The previous day, perhaps as a preemptive move to answer the question “If things are going poorly in China, what are you doing about it?, Ford announced that it was establishing Ford China as a stand-alone business unit.