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Report: U.S. Carmakers Likely to Spread Tariff Hit Across All Models
If the U.S. raises tariffs on imported cars, companies that operate factories in the U.S. will probably spread the cost over all their models, Automotive News reports.
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If the U.S. raises tariffs on imported cars, companies that operate factories in the U.S. will probably spread the cost over all their models, Automotive News reports.
AN cites research by Milwaukee-based Baird Equity Research. The firm estimates that the 20%-25% tariff threatened by the Trump administration will average $4,000 per vehicle for such companies: $3,000 for the tax itself and $1,000 for foreign-made components used in the U.S.-assembled vehicles.
Companies best positioned to implement the sharing strategy are Fiat Chrysler Automobiles, Ford, General Motors and Honda, according to Baird. The firm figures a tariff will raise prices about $6,000 for brands such as Audi and Jaguar Land Rover that import 100% of the vehicles they sell in the U.S.
Baird estimates that the cost of such a tariff will cut annual demand for new cars by 12% or 2 million vehicles. Suppliers will be expected to absorb about one-third of the cost of the tariffs, thereby cutting their earnings 15%.
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