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Trump Dismisses Price Concerns Over Permanent Auto Tariffs

President Donald Trump recently made headlines by expressing indifference towards concerns that his auto tariffs might lead to higher prices for consumers. In a segment aired on NBC News, Trump remarked that he hopes car manufacturers will increase prices, suggesting that this would prompt buyers to choose American-made vehicles. He stated, “I hope they raise their prices, because if they do, people are gonna buy American-made cars.” However, it’s important to note that many cars assembled in the U.S. contain foreign-made parts.

In the same interview, the President confirmed the permanence of the new auto tariffs, stating, “Absolutely, they’re permanent, sure.” He emphasized his belief that the U.S. has been disadvantaged in global trade for decades and claimed that his policies aim to remedy this imbalance.

Trump’s comments came after a report from the Wall Street Journal suggested he had cautioned auto executives against raising prices due to the tariffs. Trump refuted this claim, insisting, “No, I never said that. I couldn’t care less if they raise prices, because people are going to start buying American-made cars.”

He further argued that if the cost of foreign vehicles increases, consumers would naturally turn to American alternatives.

The White House has indicated that foreign-made auto parts will incur a 25% tariff, although vehicles and components imported under the US-Mexico-Canada Agreement (USMCA) will be exempt until a proper framework for enforcement is determined.

Data from the International Trade Association, reported by the Associated Press, reveals that while over half of the value of imported auto parts last year came from Mexico and Canada, a significant amount—exceeding $70 billion—originated from regions outside of the USMCA, including Asia and Europe.

The automotive industry is characterized by highly interconnected supply chains that span North America, with components often crossing borders multiple times during the manufacturing process.

Even Elon Musk, a known ally of Trump, cautioned that his company, Tesla, which assembles all its vehicles sold in the U.S. domestically, would still feel the impact of these tariffs.

Analyst Dan Ives from Wedbush Securities has projected that the implementation of these tariffs could lead to increased vehicle prices ranging from $5,000 to $10,000, depending on whether the vehicle’s brand targets the mass market or premium segments. In a research note, Ives stated, “Every automaker in the world will have to raise prices in some form selling into the U.S., and the supply-chain logistics of this tariff announcement heard around the world is hard to even put our arms around at this moment.”

Despite the administration’s assertions that these tariffs are designed to bolster the domestic manufacturing sector, Ives expressed skepticism about the potential for car manufacturing to be fully reshored back to the U.S. He highlighted the reality that even vehicles made in America often rely on foreign-made components that account for 40% to 50% of their overall value.

Ives commented, “A U.S. car with all U.S. parts made in the U.S. is a fictional tale not even possible today.”

This discussion on auto tariffs and their implications reflects broader concerns about the complexities of global trade and manufacturing, raising questions on the feasibility of reshaping the U.S. automotive landscape.

Source
www.yahoo.com