Thursday, May 24, 2018

Trump Tariffs On Auto Parts Is Going To Be HUGE

Andrew Dempsey

Trump Tariffs On Auto Parts Is Going To Be HUGE

Nearly half the vehicles sold in the U.S. are imported coming from plants in Canada and Mexico. The current administration does not like this fact and said that the imports of automobiles and auto parts are a threat to the national security.  They have taken action about this and have launched an investigation into whether tariffs are needed on the imports. Trump says that “core industries such as automobiles and automotive parts are critical to our strength as a nation”.

During a meeting with top American automaker executives, Trump said he is going to push for an increase in the production of vehicles produced in the US. In addition to that Trump also criticized the European Union auto imports and threatened a tax on these imports. Trump is seeking a new tariff of 20 to 25 percent of these imports. Critics of this move fear that countries will strike back and impose trade sanctions of their on for a threat to their national security.

If Trump is able to follow through with his plans it will be huge for US automakers. Ford, General Motors, and Chrysler have been struggling lately. Ford Stock had been plummeting lately and in February hit an all-time low at 10.24 a share. General Motors revenue has been falling in the past year and Chrysler American made cars have been reporting low sales numbers. Many plant employees of these companies have been laid off and some plants have been shutting down completely. With a boost that Trump is promising this might put light back into struggling companies. This would also lower unemployment in the U.S. especially in Detroit where the unemployment is 7.8%. In addition, this will boost GDP with more products being built in the US. Overall this tariff would be a good thing for the United States.   https://www.msn.com/en-us/news/politics/trump-administration-explores-tariffs-on-autos-auto-parts/ar-AAxISpK

https://www.autoblog.com/2017/03/16/trump-cafe-review-not-good-for-automakers/

https://www.cnbc.com/2017/01/06/trumps-tweets-aside-automakers-are-fastest-us-job-creators-under-obama.html

https://www.google.com/search?q=ford+stock&rlz=1C1GCEA_enUS789US789&oq=ford+stock+&aqs=chrome.0.0l6.2936j1j7&sourceid=chrome&ie=UTF-8&safe=active&ssui=on

   

10 comments:

  1. Although the import taxes may not be needed it does make sense that trump would encourage domestic manufacturing as it was one of the key points made in his campaign. In addition The number of U.S cars exported is decreasing and the imports are rising which risks decreases in GDP.

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  2. The lack of American made goods is not an issue of National security. We are in no way endangered because we are importing our automobiles more than manufacturing them. You also have neglected to mention the drawbacks of a tariff, such as increased prices for the good for both businesses and consumers. There will also be an efficiency loss with the removal of some competition, worsening the industry in the long run. Trump doesn't know the drawbacks, and so in his mind it is a perfect idea, which isn't what should happen.

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  3. This is no shock to me, over the past two months there have been 1 or 2 car company's that have said, if they are not #1 they will be leaving the US and going somewhere else, right know its just them saying it so there sales go up, but these 2 car company's wound of not make of a public statement like this, if they are really going to leave. This make sense why trump wants to push for more cars to be made here in the US. If more cars are made here that means less money we have to pay, but that can turn into something we don't want to deal with, plus because we trade with china and mexico if we take that away from them, they might fight back.

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  4. I think that it is a good thing to push people to buy more American made cars but we do not need to make foreign cars completely unavailable. If people started to buy more American made cars our GDP would start to increase and our unemployment rate would decrease because of the need for labor. Not forcing one or the other but making it a more equal option will keep our economy stable.

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  5. Wow this is HUGE. I'm surprised to hear that American car companies aren't doing very well. If this follows through it could cause trade wars with other countries. I wonder if the tariffs on automobiles will in turn effect the trade of other goods as well, or cause other countries to retaliate. It is good however to encourage people to buy American made cars. This would have a positive effect on our GDP and employment.

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  6. Thanks Andrew! Very cool! It seems as though American cars aren't the hot thing anymore. Maybe this is because of the markets view on them, and the stereotype that they are heavy, clunky and unreliable. However, it really comes down to how you take care of them. In addition, Japanese cars like Honda and Toyota are known for being reliable and running well.

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  8. Nice article! Very relevant. If people started to buy more American made cars our GDP would start to increase and our unemployment rate would decrease because of the need for labor. In this case it does make sense that Trump would want more cars to be made in the US.

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  9. While of course Donald Trump is trying to promote domestic production, a tariff of any kind is, once you do a little digging, not a great solution. Americans that prefer foreign vehicles will not be happy with a government that is forcefully promoting the production of american vehicles, because it interferes with their tastes. Consequently, foreign trade partners can also play this tariff game, and can create their own tariffs on American cars. A trade war can ensue. So, is it really worth it if profits decrease in foreign markets similar to how they decrease in America?

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  10. Although you are saying that Trump’s auto tariffs would positively impact the automotive industry and increase job growth, it could also do exactly the opposite. The Business Insider article "These Are The States That Would Be Wrecked By Trump's Proposed Tariff On Cars" makes the point that car companies in the U.S. have to import car parts and the new tariff would apply to these parts as well. Rather than paying to import parts to the U.S., car companies may choose to lay off workers here, and go to foreign countries factories to save money. In effect the U.S. would be losing jobs. If companies don’t choose to move to foreign countries, they may increase the prices of their cars instead, which may drive away potential buyers and send the car companies out of business. While you and Trump believes that new tariffs will be beneficially, I am more skeptical and believe they will do more harm than good.

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