Ever since he assumed office this year Trump has been adamant on his stance of beginning a “tariff war” and his recent move only strengthens his thoughts. He announced a 25 per cent tariff on automobiles exported to the US and said this will increase domestic manufacturing raising revenue of over $100 billion annually.
What we’re going to be doing is a 25 per cent tariff on all cars that are not made in the United States. If they’re made in the United States, it is absolutely no tariff.
Trump said in the White House
This means an increased cost and reduced sales for the manufacturers, and emphasising his move Trump called this “permanent.” The tariff when come into force from April 3rd and will have shockwaves in the entire market. While it is no surprise that his actions have recently triggered the financial market with fear of uncertainty, this move is going to hit the middle class tragically.
This leads to fewer choices as the US currently imports 8 million cars and light trucks from South Korea, Japan, and Mexico. Economists further believe that this move may help in the long run but in the shooter period, it will negatively impact the consumers and the producers as changing the supply chain takes a long time.
The effects of this announcement are visible in the market, as stocks of General Motors and Stellantis fell by 3 per cent and 3.6 per cent respectively, while that of Ford grew. The move also a backlash from leaders of the EU who commented on problems in trade ties due to the action and the Canadian Prime minister who said to take action to protect the businesses.
