The plan of US President Donald Trump to implement mutual rates of at least 10 percent on the trading partners of the country to strengthen North -American production and increasing federal income has increased the anger of Australian economists, but will have little direct impact on the local economy of its Automarkt.
Speaking from the White House Rose Garden yesterday (April 2), President Trump stated that these rates would vary on the basis of the taxes and trade barriers that each country applies to the US.
“We will overload our domestic industrial basis, we will open foreign markets and break down foreign trade barriers,” said President Trump. “Ultimately, more production at home will mean stronger competition and lower prices for consumers.”
Although the car industry was often referred by President Trump, he clarified that cars would not be included in the mutual tariff schedule.
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Instead, from 3 April, vehicles will remain subject to the previously announced 25 percent rates on imported vehicles, with important components such as engines and transmissions that will be confronted with similar rates from 3 May.
Steel and aluminum import already has a 25 percent duty and is not influenced by the last mutual rate
Despite the exclusion of vehicles and automatic components of the new mutual rates, analysts remain careful. Bernstein Research emphasized constant worries in a memorandum for investors: “Although the sector may feel that it has just been disguised a bullet, we remain concerned that vehicle and parts rates are here to stay and will add a substantial cost burden to the sector.”
Countries that are part of the United States-Mexico-Canada agreement (USMCA) remain exempt from these mutual tasks, although no non-usmca-compliant goods from Canada and Mexico would be a rates of 12 percent, rates should be lifted in the future.
Chinese entry will be given an extra rate of 34 percent on top of the existing 20 percent duty.
According to Trump, the rates were determined by assessing the combined total rates of each nation, non-tariff barriers and other commercial practices that the administration has taken unfairly. The US will answer about half of those rated costs.
“We will charge them about half of what they are and have charged us, so the rates will not be completely reciprocal,” President Trump explained. “I could have done that, yes, but it would have been difficult for many countries.”
This latest rate announcement is expected to considerably disrupt the supply chain of the car. Volkswagen from America has already responded by putting train shipments from Mexican -built vehicles in the US, planning to include additional import costs in the costs of the window sticker, obtained by dealer communication by Automotive news.
Analysts and managers warn that such extensive rates will seriously influence manufacturers, dramatically increase the vehicle prices and possibly result in substantial production slums.
In 2024 alone, the American product products worth the value of US $ 474 billion (a $ 714 billion), including passenger cars with a value of US $ 220 billion (a $ 331 billion). The largest suppliers were Mexico, Japan, South Korea, Canada and Germany.
Industry expert Michael Robinet, vice -president of the prediction strategy at S&P Global Mobility, emphasized the challenges that lie in front of us: “There are so many rates that suppliers will have a kind of guess what the total rate will be when they reach the border. It contributes to the instability of the entire situation.”
President Trump believes that these rates can considerably improve US production and federal income, so that it would claim that vehicles are mainly made ‘in one location’.
However, market analysts, including Anderson Economic Group, estimate steep price increases for consumers. Lower vehicles such as the Honda Civic, Chevrolet Malibu and Ford Explorer could see an increase between US $ 2500 and $ 4500 (A $ 3760- $ 6770).
The prices of medium-sized pickups and SUVs from brands such as Jeep, Ram and Toyota can rise with US $ 5000 to US $ 8500 (AUD $ 7530- $ 12,800).
Luxury vehicles and full-size SUVs, including the Cadillac Escalade and BMW X5, can see price increases between US $ 10,000 and US $ 12,000 (A $ 15,060- $ 18.070), with European luxury vehicles that are potentially rising by the same amount of US $ 20,000).
“If the long term is allowed to stay, rates of all brands will make it more expensive, which influence sales, jobs and family budgets,” warned Cody Lusk, CEO of the American International Automobile Dealers Association.
Bank of America analyst John Murphy predicted that the sale of new vehicles could decrease by around 20 percent if all tariff costs are passed on to consumers, which emphasize the challenges for affordability with which car buyers are confronted.
UAW President Shawn Fain supports the rates, and claims that car manufacturers can afford to stimulate US production without passing on to the consumer. He believes that the filling of under -utilized American plants could quickly reduce thousands of American jobs.
Nevertheless, the relocation of suppliers seems challenging, given considerable differences in labor costs and limited availability of workforce in small and medium-sized North American suppliers, who are already influenced by pandemic disruptions, chip shortages and inflation, can get a serious financial tension.
“I am very concerned about the financial health of the supplier,” admitted a public manager from a large supplier to one. “If we are a large company that is struggling, I can only imagine how difficult this is for smaller suppliers.”
Local financial experts have warned that the potential impact of the rates in China could have the consequences on Australia, which extends to an automotive industry that includes an increasing number of Chinese car borders.
“The direct impact of Trump’s rates at Australia’s economy is likely to be minimal. However, the indirect effects may be more important if Australia chooses to start a Tit-for-Tat Trade War, which would eventually dampen worldwide economic growth,” said Professor Robert Brooks School.
“What happens to the growth in China will be crucial. Any delay there, in particular as a result of escalating trade tensions, could have wrinkle effects for the Australian economy.
“Although we are called ‘great people’, the export of beef in Australia is confronted with rates as a result of a bio -safety measure. Anyway, our beef industry will have to look for alternative markets to remain viable.
“I do see that the government is preparing to offer financial support, but this is really about more than subsidies. The key will open new market access and negotiate better trade routes for our Agribusiness.”
