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With the 25% tariff on vehicle imports and some auto parts going into effect, there are industry analysts who expect price increases to be passed onto customers.
U.S. President Donald Trump's tariff of 25% on vehicle imports and certain auto parts goes into effect within hours. Trump said he "couldn't care less if the automakers raise prices," because this was a short-term pain and part of a national security and longer-term economic strategy.
In this region of Greater Williamsport, local vehicle dealerships must brace for the 25% tariff to be imposed on products not made in the U.S.
For new cars priced under $40,000, Cox Automotive economists said prices could increase as much as $6,000 per vehicle.
Local new car dealerships may have prepared by ordering vehicles to their lots ahead of the import tax, but many vehicles contain components made in global factories, not just one place.
The price gouge expected may also lend those looking for transportation to seek out a quality, used car.
Pic Brothers Auto Sales, 101 N. Main St., Muncy, for example, has at least 80-plus vehicles to choose from, said Shawn Pequignot, co-owner. Pequingnot said in a brief telephone interview he was not thinking much about the tariffs, focused more on providing the quality, new car, SUV, and truck service the community expects.
He agreed with the analysis that it might be a more advantageous time for customers on budgets to look for a quality new car, SUV or truck.
Maintaining a vehicle could cost more if the 25% tariffs on part costs get passed on to consumers, according to a store in Autotrader.com.
Dealership and body shops source imported parts that are exactly like or similar to the ones originally used to make your vehicle, the automobile industry source said.
If leasing a vehicle, contract terms often state that you must maintain the vehicle according to manufacturer specifications. That often means using original manufacturer parts.
For anyone with a vehicle, there are auto parts to buy.
The cost of auto parts is also expected to increase, as one major auto parts chain with stores dotting the landscape here has described how it is prepared for what's next.
"We are monitoring the situation and working closely with our suppliers to ensure we continue to offer quality products at competitive prices," said Nicole Docouer, a spokeswoman with Advanced Auto Parts. "We have a strong availability strategy and will be ready to adjust as needed," she said.
Specifically, for the 25% tax on auto parts it is for engines, transmissions, powertrain parts and electrical components, said the White House communications office, who said that could expand to other auto parts, if necessary.
Meanwhile, the tariff on the vehicles will be applied to imported passenger vehicles (sedans, SUVs, crossovers, minivans, cargo vans) and light trucks.
The tariffs, or taxes, are scheduled to take effect on cars imported from countries including Canada and Mexico.
The reality is this is a global economy. Many foreign car brands are also made in the U.S. Among them include: Acura, Honda, Hyundai, Kia, Mercedes, Nissan, Subaru, Toyota, Volkswagen among those listed in an article by U.S. News and World Report.
But there are also Dodge, Ford, General Motors, Honda, Lexus, Lincoln, Toyota, Stellentis, Toyota, Honda, Lexus, Lincoln, Stellentis, General Motors and Ford manufactured in plants across the border in Canada.
Of 3.7 million vehicles built in Mexico during 2019 during the first Trump administration, the vast majority were exported.
Many came to dealerships in this country, but building a car requires a global web of suppliers and manufacturing plants.
Mexico also served as an essential link in that network.
It's more than just lower labor costs that move production to Mexico. It was also the country's free-trade relationships that allowed it to conduct business with dozens of other nations efficiently. Plus, there are hundreds of parts manufacturers founded and headquartered in Canada. Some of the largest include Magna International in Aurora, Ontario; Linamar Corporation in Guelph, Ontario; Martinrea International in Concord, Ontario; Plasman in Oldcastle, Ontario; and ABC Technologies in Toronto.
The tariffs have a potential for placing thousands of jobs to be in peril and are widely expected to cause upheaval on both sides of the border, according to Driving.com, an industry analyst site. The media source interviewed men and women at the Ontario assembly lines.
In Windsor, often the first and hardest hit when recessions strike, the spectre of widespread job loss has conjured painful memories of past downturns, according to the story.
"We're in shock," said Unifor Local 200 president John D'Agnolo, who represents about 2,000 Ford workers in Canada's automotive capital. "We've seen houses lost, and we've seen keys dropped off at the bank. We don't want to see that again," he told a reporter with the Driving.com site.
Meanwhile, auto industry experts told the Associated Press the tariff is meant to increase domestic auto production, but the reality is many of these factories take years of planning and building and capital investment.
Not all are on board for the economic benefit touted by the administration. The 25% tariffs were denounced by Jennifer Safavian, president and CEO of Autos Drive America, which represents international auto manufacturers, speaking with The Associated Press.
"The tariffs imposed . . . will make it more expensive to produce and sell cars in the United States, ultimately leading to higher prices, fewer options for consumers, and fewer manufacturing jobs in the U.S.," she said.
If they want to dodge the import tax, the companies will have to make "hard choices," according to Richard Mojica, a trade attorney who spoke with the Associated Press.
Some companies also will be able to pivot operations to the U.S., while others are tied to factories in Mexico or elsewhere to make a move anytime soon, Vanessa Miller, chair of the automotive team at the law firm Foley & Lardner, said to AP.
Not the first rodeo
It's not the first time the president has tried to tax foreign cars, as in his first term he declared auto imports a threat to national security, which gave him the authority to impose tariffs on them. However, importers of automobiles under the United States-Mexico-Canada Agreement will be given the opportunity to certify their U.S. content and systems will be implemented such that the 25% tariff will only apply to the value of their non-U.S. content.
Trump said he is taking action to protect America's automobile industry, which is vital to national security and has been undermined by excessive imports threatening America's domestic industrial base and supply chains.
The White House has also said how the COVID-19 pandemic exposed critical vulnerabilities and choke points in global supply chains, undermining the nation's ability to maintain a resilient domestic industrial base, and how this is being done to strengthen the nation's security.
"It adds to this uncertainty facing all automakers as this industry's supply chain is inherently global and has optimized around moving components across national borders where free trade agreements have existed in the past," said John Paul MacDuffie, professor of management at the University of Pennsylvania to the AP.