After two months of flip-flopping on tariffs, imposing them one day and often suspending them the next, Donald Trump gunned the accelerator of his trade war on Wednesday by announcing a 25% tariff on autos and auto parts imported into the United States. That’s a very big deal, and while the president insists this hefty import tax on cars is going to be good for “anybody who has plants in the United States”, his move – like a car in desperate need of a tune-up – could easily backfire.
Nearly half of the cars sold in the US are imported, and Trump’s 25% tariff will add at least $6,000 to the sticker price of the average car, industry experts say. Domestic auto producers will be able to jack up their sticker prices because the new tariffs will make US automakers face considerably less price competition from imported cars. This expected sticker shock could anger America’s inflation-weary consumers and voters, especially since candidate Trump had pledged to battle to bring down prices. These higher car prices could cause a quick drop in auto sales in the US, and that could translate into a downturn in auto production, too.
