Donald Trump has been elected the 47th President of the United States, returning to the Oval Office four years after he last held the position.
His return to power has been one of controversy, with his opponents highlighting how the now 78-year-old will handle his second presidency, and what it means for the US’s global partners and enemies.
Australia has long been an ally of the US, but since we no longer produce our own vehicles from scratch, the local auto industry could be affected by external factors, such as what’s going on in US politics overnight happened.
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In the run-up to the election, Trump tried to win the swing state of Michigan – which he achieved – by targeting the region’s auto industry, home to the ‘Big Three’ automakers: Ford, General Motors (Chevrolet, Cadillac, GMC) and Stellantis (Jeep, Ram, Dodge, Chrysler).
In July, the president-elect not only lashed out at the head of the United Auto Workers (UAW) union, but also promised to raise tariffs on vehicles made outside the US by Chinese automakers.
“We are going to reduce car production and quickly,” Trump said.
“[The Chinese] are building some of the largest car factories in the world… Those factories will be built in the US and our people will staff those factories.
“And if they don’t agree with us, we will put a tariff of about 100 to 200 percent on every car and they will be unsellable in the US.”
His statement came months after now-outgoing President Joe Biden also announced a 100 percent tariff on Chinese electric vehicles (EVs) in May.
While only a handful of Chinese-built models are sold in the US, such as GM’s Buick Envision and Ford’s Lincoln Nautilus, there are a handful of car brands owned by Chinese conglomerates that sell cars there, including Lotus, Polestar and Volvo.
The Polestar 2 is currently the only electric car in the US market built in China by a Chinese company, making it subject to the significant potential tariff.
It was believed that other brands, such as BYD, were interested in opening factories in Mexico to export cars to the US, but with Mr Trump also promising to impose tariffs of up to 200 percent on vehicles made south of the border , this would largely be a problem. unprofitable exercise.
What does this all mean for Australia?
Now that Chinese brands are less likely to enter the US market, they will have to look to other regions for exports.
That is made even more difficult by the European Union, which recently imposed tariffs of up to 45.3 percent on Chinese electric vehicles.
However, not only does Australia have a free trade agreement with China, but motorists are already buying cars made in the world’s second most populous country in droves, with only Japan and Thailand still supplying more vehicles for our market.
Australia still has a relatively small market for new vehicles, but it is also one of the most competitive in the world, with almost 60 car brands currently on sale or about to be launched locally.
At a time when so-called ‘legacy’ manufacturers such as Citroen are leaving showrooms due to declining sales, the influx of brands from China seems endless.
Last week, Jack Puzin, the CEO of EV Automotive – the Australian distributor of Chinese EV maker Skywell – cited tariffs in the US and Europe as a driving force behind the rise of competition here as brands are locked out of other markets.
“All over the world, the Europeans and Americans are excluding the Chinese,” Puzin said AutoExpert.
‘Obviously their market is spreading to wherever they can sell, and Australia is one of them.
“Why wouldn’t they do that with such a generous free trade agreement?”
In contrast, there is likely to be little change for Australia if Trump also imposes tariffs on Mexican-made vehicles, as they represent about one percent of local car imports, compared to the figure of about 15 percent for Chinese-made models.
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