Trump’s car rates will be targeted: what does that mean for industry?

President Trump is preparing the “Liberation Day”, with a new series of prices that should be announced on April 2

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The prices continue to be the agenda for President Trump and his administration, with April 2 the next big moment. Entitled “Liberation Day”, Trump plans to announce new reciprocal rates as a remuneration. Its impact on the automotive industry continues to play a role in the minds of leaders, but according to sources close to the effort, the new price plan will be more concentrated.

Read: Tesla sends a cry with the help of the Trump administrator on prices

Trump has long mentioned prices for the foreign automotive industry, but the prices initially offered against Mexico and Canada were interrupted for the second time in early March.

Impact on the automotive industry

The American president had initially declared that the car rates would come in the same batch of April 2, but according to BloombergIt is not yet clear if the cars will be under the same lot of “Liberation Day”.

However, even if the automotive industry is spared from the last announcement, this does not mean that managers are out of the water. Trump openly criticizing countries like Japan, South Korea, Germany and Mexico for their business practices, car manufacturers in these markets are clearly in reticle.

For the global automotive industry, which is based heavily on cross -border supply chains, even the smell of protectionism poses an important challenge. Cars assembled in the United States often contain parts from a dozen different countries. The prices on these components could increase production costs, inflate prices and slow down the demand of consumers. For American car manufacturers with international manufacturing facilities, this could become a logistics and financial nightmare.

Prices as a income?

On the other hand, Trump proposed that the introduction of prices is more than a question of economic leverage – the American president predicting that they could become a source of income. The idea that prices could raise billions of dollars for the US economy have been suggested by its team and compensate for the proposed tax reductions.

Plus: Trump announces Hyundai’s investment of $ 21 billion in the United States

But although it may seem attractive from an economic point of view, there is a problem: consumers end up paying it. When the United States tasted prices on imported goods, these costs are generally adopted to consumers thanks to higher prices. Thus, while the government collects income, it is the consumer who feels the financial pinch.

In any case, it would seem that local car manufacturers do not exactly share Trump’s optimistic point of view. Ford CEO Jim Farley said the threat of prices had the potential to cause chaos, but finally believed that Trump was aimed at strengthening the American automotive industry. Then, on March 5, Trump announced that after discussions with the three major car manufacturers, that his administration would postpone the introduction of Mexican and Canadian prices.