A few months ago, the 25% tax on imported cars and light-duty trucks to the States started to take effect, and now the U.S. automotive market is in the process of receiving this new adjustment. This could alter the prices consumers pay for new vehicles from April 2nd. Because the tariffs also include important automotive parts — like engines, transmissions, and electronics — they apply to a large portion of the market.
Vehicle Origin Landscape Change
In recent years, the automotive sector has seen a major geographical shift in vehicle production. Historically, domestic manufacturers and foreign brands closely tracked to U.S. made vehicles and imports, but now the lines have blurred. A zillion foreign car manufactories that still build in the USA Conversely, in the case of domestic brands some of their models are built in Canada and Mexico or are imported from other parts of the world. Globalisation of manufacturing has turned vehicle and vehicle parts sourcing complex.
Figuring out the Tariff Impact
This makes it very difficult to determine which tariff should apply to individual vehicle. This includes international shipping of its parts and rides as they are assembled. Moreover, there can be different levels of equipment and accessory packages that can also impact the share of imported parts in one single model. The group of data points automakers must provide the National Highway Traffic Safety Administration (NHTSA) under federal law and which also requires “ground rules” for consumers to apply to make the information meaningful includes one of seven categories, the country of origin where vehicles and their parts come from. This is information that is usually available on the car Monroney sticker. Likewise, some institutions, including the Kogod School of Business at the American University calculate Indexes containing information about domestic content share of vehicles.
May affect consumer prices
People don’t yet know exactly how directly those tariffs will be passed on to consumers. Either auto-makers can eat some of that cost or they can pass penury on through lost price. While some analysts have speculated at what they might ultimately end up spending to purchase the vehicle, numbers are based on the eventuality. The extent to which these tariffs impact the market will be largely determined by the automotive supply chain and broader market conditions.
Thereby Vehicles — appears in the title of the domestic content
But the fresh duties on reduced number of vehicles ought to less affect automobiles with larger share of local articles. The Kogod School of Business publishes the “Made in America Auto Index” of cars with the most domestic content in general. Consider, for example, Tesla models, which tend to claim the domestic content stakes quite effectively. Merdan noted that Honda CR-Vs and Chevrolet Equinoxes have also had similar levels of domestic content in 2020. Affairs like this would certainly help consumers who are confused over how the new tariffs affect them.
