US President Donald Trump declared on Saturday that he “couldn’t care less” if automakers increase US car prices in the wake of his imposition of import tariffs.
There have been reports that Trump threatened auto executives with reprisals if prices jump, but he told NBC News that increasing prices would simply help US-based manufacturers.
“I couldn’t care less. I hope they raise their prices, because if they do, people are gonna buy American-made cars. We have plenty,” he told NBC host Kristen Welker.
Photo: AFP
Trump on Thursday imposed a blanket 25 percent import tariff on cars and light trucks made outside the US, due to take effect on Thursday.
Tariffs would be delayed for car parts from countries covered by a US trade pact with Mexico and Canada, as officials try to disentangle the mixed supply chain.
Otherwise, Trump intends for the import levy to be permanent to boost US production and, in his view, save the US auto industry.
That would be particularly painful, because the US auto sector relies on a complex global supply chain, sometimes involving multiple border crossings, with assembly in one country of parts manufactured in others.
The manufacturing process at Ford Motor Co and General Motors Co depends largely on a highly complex back-and-forth between the US, Mexico and Canada — the three countries linked by the US-Mexico-Canada Agreement (USMCA), a free trade agreement signed by Trump during his first term.
However, Trump’s decree does not provide exemptions for imports under the USMCA, dashing industry hopes that car parts would be spared.
The tariffs include “crucial parts” — engines, transmissions, powertrains and electrical components are on the list that could be expanded.
Parts not originally manufactured in the US would face 25 percent tariffs, just like finished foreign vehicles.
The White House said that of the 16 million new vehicles sold in the US last year, half were assembled in the country, but contained only 40 to 50 percent US-made components.
Asked by NBC News what his message would be to worried auto executives, Trump said: “The message is ‘congratulations.’”
“If you make your car in the United States, you’re going to make a lot of money,” he said.
The US president’s goal is to increase manufacturing at home, but relocating factories or reconfiguring a supply chain cannot happen overnight.
Experts have no doubt that there would be a price increase for new vehicles in the US, which would subsequently affect a weakened used-car market, as owners keep their vehicles longer.
The cost of an affected new vehicle could increase by 9 to 12 percent, or US$4,000 to US$5,300, JPMorgan Chase & Co anticipates.
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