After steel and aluminum, and pending construction wood or copper, US President Donald Trump announced on Wednesday March 26, 25 % additional customs duties on cars, drawing threats of reprisals.
These taxes will apply to “all cars that are not made in the United States,” said the American president from the White House, adding that they will come into force on April 2. “We will start to collect them on the 3rd,” he said, justifying: “We are going to charge the countries that do business in our country and take our wealth”.
“This is added to the already existing customs duties on these goods,” said one of his advisers. The so far applied rate was 2.5 %. This means that imported cars will now be taxed at 27.5 % of their value.
A “considerable impact on the world economy”
If the customs duties announced on Canadian or Mexican products, currently suspended, are applied, cars from these countries could be taxed at 50 %. Canadian Prime Minister Mark Carney denounced a “direct Canadian workers’ attack. “We will defend them, we will defend our industries, we will defend our country,” he said.
In Japan, whose automobile represents almost a third of exports to the United States, Prime Minister Shigeru Ishiba warned considering retaliatory measures. His government, via his spokesperson, has warned of the “considerable impact” of the American customs offensive on Nippo-American economic relations but also “on the world economy and the multilateral trade system”.
Japanese and South Korean giants in the sector like Toyota and Hyundai saw their stocks fall on the stock market Thursday. On a visit to Japan, Brazilian president Lula said that his country “could not stay without doing anything”.
Targeted “friends”
“Half of the vehicles sold in the United States are manufactured abroad. And among those assembled here, half are from parts from abroad, which means that less than half of the vehicles sold in the country contain American parts,” said Donald Trump’s commerce, Peter Navarro, in a press point.
The only exception: vehicles assembled in Mexico or Canada will be applied for 25 % tax only on the part of the parts they contain not coming from the United States.
Washington does not hide it, these customs duties are primarily aimed at his “friends”, Peter Navarro reproaching Germany and Japan for wanting to “weaken” the American automotive industry by “reserving the manufacture of value -added parts”. According to him, only 19 % of cars sold in the United States are made in the country.
This is a new blow for the automotive sector, which has already been shaken by previous announcements in the matter. In early February, the announcement of 25 % customs duties on Canadian and Mexican products made the sector tremble, while the production chain of the main American car manufacturers is largely integrated between the three North American countries.
Their postponement, until April 2, had then constituted relief for industry, before those imposed this time on steel and aluminum, effective since mid-March, come to restore it.
American manufacturers concerned, including Tesla
Almost half of the steel and aluminum consumed by the American industries is indeed imported. American manufacturers have factories abroad that feed the American market, mainly in Canada and Mexico. Ford thus imports 20 % of the vehicles it sells in the country and General Motors around 750,000 per year, mainly of the two neighboring countries.
Close ally of Donald Trump, Elon Musk warned Wednesday evening that new customs duties will have a “significant” effect on the production cost of Tesla, via imported spare parts.
This new tax is part of an extensive use of customs duties by the American president, the next step, considered to be the most important, should therefore take place on April 2. Donald Trump should then, in what he describes as the “Liberation Day”, announce the establishment of so-called “reciprocal” customs duties, which will concern all the products imported into the United States.
The principle of “reciprocal” customs duties is that products from a country and entering the United States will now be taxed at the same level as are the American products exported to said country. But if he had first said that there would be “no exemption or exception”, Donald Trump assured Wednesday that these new taxes would be “very mild”. He also said he was ready to make customs concessions to China in exchange for an agreement on Tiktok, threatened with ban in the United States unless his Chinese parent company, Bytedance, does not accept to give in its American activities.