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U.S. Car Tariffs Could Cut Sales by 1.8 Million Units
The Trump administration’s threat of a 25% tariff on all cars imported to the U.S. will negatively affect all carmakers doing business in the country, according to LMC Automotive.
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The Trump administration’s threat of a 25% tariff on all cars imported to the U.S. will negatively affect all carmakers doing business in the country, according to LMC Automotive.
Some 8.2 million vehicles per year—or 48% of total sales—would be subject to the tariff, notes Jeff Schuster, president of Americas operations and global vehicle forecasting. As described by the White House, the levy would include vehicles currently shipped duty-free to the U.S. from Canada and Mexico under terms of the North American Free Trade Agreement.
Schuster assumes that Trump’s tariff threat is a negotiating tactic that would be applied briefly, if at all. The concern is that the strategy could escalate into a more lasting trade war that would cut new-car sales, erode American jobs and hurt economic growth.
LMC partner Oxford Economics estimates that a longer-term 25% tariff could cost 400,000 jobs over three years and lower growth in U.S. gross domestic product by 0.5% annually. The impact on annual sales would be about 917,000 units if carmakers pass along half the cost of the tariff to buyers and 1.8 million if the total tax is passed through.
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