The United States imposed 25 percent invoices on imported car parts on Saturday, which could strongly increase prices for new and used vehicles as well as for repairs and fuses.
The latest invoices, which President Trump ordered in March as part of his plan to promote domestic construction, come after 25 % of the contributions to imported cars in early April.
This second round of duties in imported parts will have a wider impact, because even cars manufactured in the United States often have engines, transmissions, batteries or other accessories produced in other countries.
The administration said on Tuesday that invoices were intended to “protect national security, encouraging domestic car production and reducing US dependence on foreign cars and their sections.”
Invoices for the parties will not apply to data from Canada or Mexico, as long as the goods meet the requirements of a North American trade agreement that are negotiated during Mr Trump’s first term. Among other things, this agreement requires that a minimum percentage of the content of the car sections comes from North America.
The administration also said that imported car parts would not be submitted to other contributions, such as aluminum and steel. And companies that made cars in the United States will be exempt for two years from having to pay some of the invoices for imported parties.
Mr Trump’s invoices have already pushed the prices of new cars as customers flock to delegations to buy vehicles before the entry into force of contributions. Invoices have a wavy impact on the used car market, as more people are looking for affordable alternatives to new cars, increasing demand and prices.
Invoices for new car accessories are also expected to increase the cost of repairs and insurance premiums, as spare parts will become more expensive. Increasing car prices will contribute to overall inflation, which Mr Trump had promised to decline.
The president insisted that invoices would bring the construction back to the United States. But even if politics succeeds, consumers will pay even more for cars. Many goods, including many cars, can often be much cheaper in China, Mexico or other countries outside the United States.
“Many pieces, such as fasteners, washers, carpets, wiring looms are not just available – we can’t even buy these places here,” said Jim Farley, Managing Director of Ford Motor, at CNN this week.
The automakers and suppliers say it will take years to convey assembly lines. And they are unlikely to commit billions of dollars for domestic construction due to uncertainty about the direction of commercial policy.
Mr Trump has often changed his mind about the size of the invoices and the way they need to be applied. On Tuesday, it amended some of the rules that allow automakers to avoid paying duties to part of the data they have imported for two years. The measures provide some relief in the industry, but cars will still increase by thousands of dollars, analysts said.
There will be unpredictable side effects. Financial stress could lead some suppliers out of business, creating shortages of components.
“Car suppliers are already in minutes,” said Lenny Larocca, leader of the US Car Industry at the KPMG Counseling Company. “They cannot afford the full cost of 25 % of invoices.”
Mr Trump’s decision to relieve many parts of Canada and Mexico, however, will facilitate the burden on some companies.
The automaker represents about 5 % of Mexico’s gross domestic product and employs about one million people in the country. Vehicles and parts are by far the largest exports of Mexico to the United States.
“A little bit, this fog cleanses,” said Marcelo Ebrard, a Mexican Finance Minister, at an event with business leaders and diplomats on Wednesday. “What we are going to face is a situation that is not as disadvantaged and many were expected to be.”
In Canada, however, many spare parts manufacturers provide car factories in this country, said Flavio Volpe, president of the Association of Mark Manufacturers. And the vehicles that the plants make will still be hit by invoices when exported to the United States.
“The health of the Canadian car sector is that there is a cluster of construction that we can supply locally,” Mr Volpe said.
On Friday, General Motors said that due to invoices, it eliminates a third shift in a truck assembly line in Oshawa, Ontario. This factory will now build more trucks for Canadians, the company said. Unifor said the reduction would eliminate about 700 trade union jobs and was likely to cause access to accessories to dismiss another 1,200 people.
Prime Minister Mark Carney said GM’s decision was a “terrible event” of the financial crisis created by Mr Trump for Canada.
Invoices will hit some highways harder than others. Tesla and Ford are a bit less vulnerable. Tesla manufactures all the cars it sells to the United States in California and Texas. Ford says it makes almost 80 % of vehicles selling to the United States in the domestic market, including Fine Fine Pickups, which are the best vehicles they sell in the country.
General Motors will suffer more, analysts say, because imported parties often represent more than half the value of chevrolets or cadillacs manufactured in the United States. GM also imports cars from Canada, Mexico and South Korea.
Volvo Cars, which has a factory in South Carolina, but uses many parts of China, will also hit hard, analysts say.
Even companies that make vehicles in the United States will feel the pain. Rivian manufactures electric pickups in Illinois, but imports batteries from South Korea and China that will be subject to invoices.
Invoices are expected to shrink the offer of less expensive vehicles. Nearly 80 percent of cars priced in less than $ 30,000 will be subject to 25 %invoices, including popular vehicles such as Honda Civic, Toyota Corolla and Chevrolet Trax, according to Cox Automotive.
Car prices will probably not go up immediately, as most car manufacturers and their traders have large stocks of cars manufactured before invoices. Ford, Hyundai and Volkswagen are among cars that said they will not increase prices for several months. However, motorists are not profitable enough to absorb the increased cost of invoices indefinitely.
Administration officials continue to discuss invoices with automakers and the duties could change. But uncertainty creates huge headaches for highways. GM said on Thursday that invoices would cost up to $ 5 billion this year. Other companies such as Stellantis and Mercedes-Benz have told investors that they can no longer make reliable sales and profit forecasts for 2025.
Ian Austen and Emiliano RodrÃguez Mega They contributed reports.
