US automakers have been granted a temporary reprieve from tariffs imposed by President Trump, but experts say it’s unlikely to be enough time for the companies to adapt and minimize damage from the intensifying trade war.
The one-month exemption from 25% tariffs on vehicles and auto parts traded through the North American trade agreement (USMCA) won’t provide sufficient time for automakers to make significant changes. Industry experts argue that the short timeline is unrealistic, given the complexity of modern assembly lines and manufacturing processes.
Automakers have already shrunk their global footprint in recent years, but they remain global companies with complex supply chains. “It’s just not that simple” to switch production to the US quickly, said John Paul MacDuffie, a professor at the University of Pennsylvania. The industry has faced disruptions due to labor negotiations, COVID-19, and other factors, which have already taken a toll on production.
The tariff exemption is temporary, with steel and aluminum tariffs set to take effect on March 12. Then, in April, Trump plans to impose broad “reciprocal” tariffs that could disrupt the industry quickly and dramatically. Industry analysts warn that this would lead to lower profits for automakers, higher prices for consumers, and reduced sales.
“The uncertainty created for the auto industry will inhibit investment as firms try to assess what the future looks like,” said Brett House, a professor at Columbia University’s business school. Automakers have limited clarity on the future of trade policies and are struggling to make informed decisions about their operations.
Source: https://apnews.com/article/trump-automakers-tariffs-us-mexico-canada-exemption-c68f8e80fbbf156f5e50e4aac8dc086b