President Trump said on Wednesday that he would impose a 25 % invoice on cars and car parts imported to the United States, a move that is likely to raise prices for US consumers and drop chains of supply in disorder as the president seeks to boost the construction.
The invoices will come into force on April 3 and will be implemented in both the finished cars and the trucks shipped to the United States and to imported places assembled in cars in US car plants. These invoices will hit foreign brands as well as American, such as Ford Motor and General Motors, who build some of their vehicles in Canada or Mexico.
Almost half of all vehicles sold in the United States are imported, as well as nearly 60 % of sections in vehicles assembled in the United States. This means that invoices could push car prices significantly when inflation has already done cars and trucks more expensive for American consumers.
During the observations at the White House, Mr Trump said the invoices would encourage car companies and their suppliers to set up a store in the United States.
“Anyone who has plants in the United States will be good,” he said.
But the automotive industry is global and has been created around trade agreements that allow factories in various countries to specialize in certain parts or types of cars, with the expectation that they will face little or no invoices. This is especially true for North America, where national car sectors have shrunk together by trade agreements since the 1960s.
Mexico is the largest source of vehicles in the United States, followed by Japan, South Korea, Canada and Germany.
Stock markets have fallen into the news that car invoices would be imposed. The shares of large cars further collapsed after hours, after the White House said the invoices would also cover imported car parts. General Motors decreased by almost 7 % and Ford and Stelantis were more than 4 % lower after the markets were closed. Tesla’s stock decreased by 1 % in extensive transactions.
Mr Trump argues that invoices will increase domestic car production, but it is not clear how quickly it can achieve this goal. Invoices can encourage companies to use more products from the United States and expand production, but new factories usually last for several years and can cost billions of dollars to build.
The additional costs that will import invoices could also be financially reversed, harm the US car industry by pushing its profits and slowing down its sales.
The measure could also launch more trade clashes with foreign countries sending many cars to the United States. And it could invite retaliation to US exports, including cars and agricultural products.
Peter Navarro, the president’s senior consultant on trade and construction, told reporters on Wednesday that “external trading officials have turned America into a lower salary assembly operation”. He added: “This threatens our national security because it has eroded the defense and industrial base of our construction.”
Mr Navarro stood out countries, such as Germany, Japan and South Korea, saying they had undermined the ability of US companies to sell their cars abroad. “It’s just just not fair, and that will change,” he said.
Some teams praised the invoices. In a statement, United Auto Workers Union President Shawn Fain said the invoices would “end the disaster of free trade that has destroyed working class communities for decades”.
“The ending of the race down the automotive industry begins with the determination of our broken trade agreements and the Trump administration has made history with today’s actions,” he said.
But others said the cars would hurt the United States as well as other countries.
“The removal of tens of thousands of jobs on both sides of the border will mean that the abandonment of North America’s leadership role,” said Candace Laing, president of the Canadian Chamber of Commerce. “This tax increase puts plants and workers at risk for generations, if not forever.”
Invoices are able to destroy the construction of cars and cars in Canada, which employs about 125,000 people directly and accounts for about 10 % of the country’s construction production. About 80 to 90 percent of Canadian production is exported.
Canada’s Prime Minister, Mark Carney, called on the announcement “Immediate Attack” and said that due to invoices the historical links between Canada and the United States “are in the process of being in the process of breaking”. Mr Carney said he would gather his cabinet on Thursday to determine what steps will be taken in response.
The situation is also intense in Mexico, where the automotive industry represents about 5 % of the country’s economic activity and employs about one million people, according to the capital economy.
General Motors manufactures some of the full -size trucks of Chevy Silvedo and GMC Sierra in Mexico. Toyota’s Tacoma pickup and two Stelandis models, Pickup RAM and Jeep Compass Sport Utility Vehicle are there. The factories in Canada make Silvedo, Toyota’s Silvedo, Vehicle of Silvedo, Honda CR-V and other popular models.
The administration said the 25 % invoice would apply to both cars and car components in Canada and Mexico, despite the signing of the US trade agreement with these nations. He created a small exception to these contributions, saying any content or materials coming from the United States, but were incorporated into cars that end in Canada and Mexico will be exempt.
Otherwise, White House officials said there would be no exceptions, and Mr Trump said on Wednesday that he was expecting the invoices to be permanent.
Given the size and importance of the car industry, the influence of invoices will collapse through the economy.
About one million Americans are employed by car manufacturers and spare parts, according to the office statistics office and used two million more in delegates selling cars and spare parts. And cars are often the only larger market for American families, which means that the additional costs from invoices could weigh greatly to consumers.
Mr Trump’s decision to impose car invoices escalates his offensive commercial approach. Since he arrived at the office, he has put an additional 20 % invoice on all US imports from China. It also imposed a 25 % invoice on almost all goods from Canada and Mexico, before the exemption of about half of these imports, which trade in accordance with the rules of the North America Agreement.
Mr Trump plans to introduce more contributions next Wednesday, when he said, he will announce “mutual invoices” that match high invoices and other commercial barriers that other countries impose on US exports. Mr Trump said on Wednesday that the invoices would be “very fair” and “very nice”.
“We’ll make it very forgiving,” he said. “I think people will be very surprised.”
Mr Trump’s car invoices will be imposed under an old commercial affair from his first term, which used a legal authority related to national security, known as Article 232. In 2019, his administration conducted an investigation into car imports and concluded that they threatened national security.
In a Presidential Declaration on Wednesday, Mr Trump said national security concerns had been “escalating” since then. He said reviews he had made in his first term in the US trade agreements with South Korea, Canada and Mexico “had not produced sufficient positive results”.
In a call with reporters on Wednesday, a White House has ruled out the concerns that car invoices could lead to a significant increase in car prices, indicating Mr Trump’s boost to secure a new tax deduction for interest payments for car loans.
However, most analysts have predicted sharp price increases from invoices. Prior to the announcement of the details, Jonathan Smoke, a leading economist by Cox Automotive, a market research company, estimates that a 25 percent invoice for goods from Mexico and Canada will even add $ 3,000 even to the cost of a car built in the United States, as well.
Invoices will add an average of $ 6,000 to the prices of cars in Mexico or Canada, a category that includes vehicles such as Toyota Tacoma Pickup, gasoline and electric versions of Chevrolet Equinox and several models of Pickups RAM, according to COX estimates.
Mr Smoke said the highest prices would prevent buyers and automakers from limiting production. He estimated that US factories would produce 20,000 fewer cars a week or about 30 percent less than usual.
“By mid -April we expect a disorder in almost all North America’s production,” Mr Smoke said on Wednesday at a teleconference with clients and journalists. “The bottom line: the lowest production, the stricter supply and the highest prices are around the corner.”
There could be a temporary benefit to companies, including Ford, Hyundai and Stellantis, who have a large number of unsold vehicles in lots of representatives. Vehicle shortages caused by invoices will allow them to clean stocks without reducing prices. But the benefit would be short -lived.
Motorists may be able to mitigate some of the effects of invoices because they have designed factories to produce different models on the same assembly line.
“Changes in production are always an option,” said Jörg Burzer, a member of the Mercedes-Benz Board of Directors who oversees production in the German automotive industry.
But it will not be possible for Mercedes to completely avoid the impact of invoices, which will significantly add to prices for new cars. The invoices “will definitely add to the cost, this is clear,” Mr Burzer said in an interview in Berlin last week.
In an effort to calm Trump’s administration, some foreign manufacturers have promised to expand their productive activities in the United States.
Hyundai Motor said during an event with Mr Trump at the White House on Monday that he will invest $ 21 billion in the United States over the next four years. The company of South Korea, which already has large factories in Georgia and Alabama, said the new investment would include a factory in Louisiana for steel production for Hyundai, Kia and Genesis cars.
Mercedes, which produces SUVs in Alabama, plans to expand its US businesses, said Ola Källenius, its chief executive, in an interview with Rome this month. “We are 100 percent dedicated to the United States and we will continue to be so and they are ready to do more,” he said, without giving details.
Simon Romero; Ian Austen and Akira Davis River They contributed reports.
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