A 25% import tax on car parts entering the US has come into force, hitting engine manufacturers such as General Motors and Ford with new costs. The tariff, along with a 25% tax on cars imported from abroad, aims to push automakers to manufacture more in the US.
However, analysts warn that any expansion of US production will likely come at the expense of other countries, leading to higher costs for businesses and ultimately higher prices for consumers. Despite concerns, car sales have surged, with General Motors reporting double-digit growth in April.
The new tariff has sparked uncertainty among car companies, with Stellantis withdrawing financial guidance due to the fluid situation. Executives expect prices to rise 1%, contrary to previous forecasts.
In response to industry concerns, President Trump has eased some tariffs and announced plans to shield firms from multiple tariffs on the same item. The administration also confirmed that cars made in Canada and Mexico will not be charged tariffs on US-made content.
Industry experts predict that while some companies may explore increasing production in the US, new factories are unlikely to be built soon due to market instability. The US may see more policy changes in the months ahead, but it’s unclear how they will impact the industry.
Source: https://www.bbc.com/news/articles/c4grdke5r1jo