Trump’s auto tariffs spark global outcry as price hikes loom

WASHINGTON - World powers on March 27 blasted US President Donald Trump’s steep tariffs on imported vehicles and parts, vowing retaliation as trade tensions intensify and price hikes appear on the horizon.

Major car exporter Germany urged a firm response from the European Union, while Japan said it “will consider all options”.

Canadian Prime Minister Mark Carney

said on March 27

that the “old relationship” of deep economic, security and military ties with Washington “is over”, adding that he expected to speak with Mr Trump in the next day or two.

The US duties of 25 per cent, which take effect on April 3 at 12.01am Eastern Time (12.01pm Singapore time), impact foreign-made cars, light trucks and vehicle parts.

Experts warn of higher vehicle costs. Italian carmaker Ferrari said it would raise prices on many models sold to the United States by up to 10 per cent from next week.

Global stock markets slumped, with shares in automakers such as Toyota, Hyundai, Mercedes and others falling. Wall Street’s main indexes closed lower as shares in General Motors and Ford fell.

French Finance Minister Eric Lombard said the only solution for the EU is to “raise tariffs on American products in response”.

Canadian PM Carney, who earlier called the tariffs a “direct attack” on his country, said he convened a meeting to discuss trade options.

Mr Trump stepped up threats overnight, saying on social media that Canada and the EU could face “far larger” surcharges if they worked together “to do economic harm to the USA”.

Price surge

JPMorgan analysts estimate that the tariffs on autos and parts could cause a US$4,000 to US$5,300 increase in average car prices.

It said that around 82 per cent of Ford’s US sales are produced domestically, with the corresponding figures for Stellantis at 71 per cent and General Motors at 53 per cent.

The American Automotive Policy Council, which represents the big three automakers, warned that tariffs must be implemented in a way that “avoids raising prices for consumers” and preserves the industry’s competitiveness.

Canadian Vehicle Manufacturers’ Association president Brian Kingston said the measures would bring higher costs for producers and consumers, alongside “a less competitive industry”.

While Mr Trump invoked emergency economic powers for some earlier tariffs, his auto levies build on a government investigation completed in 2019.

‘Cheaters’

About one in two cars sold in the US is manufactured in the country. Among imports, about half come from Mexico and Canada, with Japan, South Korea and Germany also major suppliers.

The White House estimates that of the US-made cars, their average domestic content is likely around 40 per cent.

Top Trump trade aide Peter Navarro on March 26 blasted “foreign trade cheaters” who he said have turned the US manufacturing sector into a “lower-wage assembly operation for foreign parts”.

He took aim at Germany and Japan for reserving construction of higher-value parts to their countries.

Since returning to the presidency in January, Mr Trump has imposed tariffs on imports from major trading partners Canada, Mexico and China – alongside a 25 per cent duty on steel and aluminium.

The latest levies add to those already in place for autos.

But the White House added that vehicles entering the US under the US-Mexico-Canada Agreement (USMCA) can qualify for a lower rate depending on their American content.

USMCA-compliant auto parts will remain tariff-free as officials establish a process to target their non-US content.

Mexican President Claudia Sheinbaum said tariffs were contrary to the North American trade deal, but said her country would wait until early April before responding.

‘Bargaining chip’

Uncertainty over Mr Trump’s trade plans and worries they could trigger a downturn have roiled financial markets, as consumer confidence slips.

Mr Trump has defended tariffs as a way to raise government revenue and revitalise US industry.

Targeting imported cars, however, would have “a devastating impact” on many close US trading partners, said Asia Society Policy Institute vice-president Wendy Cutler.

Ms Abby Samp from Oxford Economics said she expects “additional investments in US plants could be used as a bargaining chip to lower tariffs”.

Besides automobiles, Mr Trump is considering other sector-specific tariffs, including on pharmaceuticals, semiconductors and lumber.

He has promised a “Liberation Day” on April 2, when he is set to unveil reciprocal levies, tailored to different trading partners, to address practices that are deemed unfair. AFP