The 25% tariffs that the Donald Trump administration has implemented on all foreign car manufacturers and components have had a disastrous effect on the state of international politics and the automotive sector. The world’s major car manufacturers have made some adjustments to their plans for the US market. The historic new measures these car makers have been forced into will have a lasting effect on the global markets. Trump’s administration has been strong in their defense of the tariffs saying that they will bring manufacturing jobs to the American market.
What has led to these 25% tariffs on the world’s most loved car makers?
Once upon a time the American automotive manufacturing sector was huge. Detroit was, and still is, referred to as Motor City. Even their basketball team is called the Detroit Pistons. So their love affair with the car and promoting American manufacturing has always served the American market well. After some decades of neglect and competition that outperformed them, the American automotive manufacturing sector has made a comeback.
However, the automotive sector is a global one. The emergence of reliable, cheap, easy to maintain foreign cars has proven a challenge to the loyalty the average American has for the locally designed and built car. The automotive sector is an extremely competitive market in the modern day society. With all types of innovation taking place in all four corners of the world.
As a result the American government has made numerous attempts to encourage American and international brands to set up factories in the US. The political climate in recent years have led many to opt for Canada or Mexico instead. So the Trump administration’s idea was to introduce tariffs on all imports coming into the US. And the sector that will suffer no doubt the most is the automotive market.
What measures can the world’s major car manufacturers take in response to the tariffs?
The major foreign car makers have some recourse to take. Some dealerships in places like Utah have reportedly got enough stock to sell at their current prices without the tariffs affecting them. Giving them time to see how the situation turns out. We all understand why Trump is doing this, however his tendency to flip-flop between his stances has many in limbo.
British brand Jaguar have paused all deliveries to the United States in an attempt to wait out the political storm. Stellantis, which assembles a wide range of American cars, have halted component production in their Mexican factories. That’s what Trump seems to be ignoring. The inevitable effect his tariffs have on the very American products he is trying to promote. Not to mention the effect on the average worker.
The effects have made their way into the American job market already. Stellantis announced 900 people would be temporarily laid off at several of their factories in Michigan and Indiana. With the public blowback the Trump administration has gotten from the layoffs in several federal agencies, this is a whole new problem for them. The American factory worker holds a lot of power in the US.
How will America come back from the disaster that is the Trump tariffs?
The American government is no stranger to changing the laws to suit the needs of the public. But these 25% tariffs have the world’s economy in chaos. The stock market in America has experienced record losses since Trump’s tariff announcement. Some have even pointed to that ever dangerous recession that will no doubt be an inevitability if the tariffs continue. With foreign car makers choosing to pause operations and wait it out, not to mention that most American cars have components made abroad, the automotive sector is in trouble. At least in America.
