From Hyundai Motor Co. in South Korea to Volkswagen AG in Germany and the U.S. own Volkswagen AG, many of the world’s most prominent automakers will soon face huge costs from Trump’s new tax on automatic imports and key components.
“There are few winners,” Sam Fiorani, vice president of global vehicle automatic recording solutions, said in a telephone interview. “Consumers will be losers because their choices will be lower and higher prices.”
Also Read: Trump imposes 25% tariffs on imported cars, expected to increase tax revenue by $10 billion
One famous winner of the tariff chaos: Elon Musk. His Tesla Inc. has large factories in California and Texas, making it sold in all electric cars sold in the United States. Ford Motor Co. may also face overlapping effects than some competitors, with about 80% of cars being sold domestically.
Starting next week, the new 25% tariff will apply to all imported passenger cars and light trucks, as well as key components such as engines, transmission and electrical components such as already valid responsibilities.
The tariffs have given an advantage to automakers with large sources in the United States, and Trump also allows exemptions: the new tax applies only to non-U.S. shares of non-U.S. vehicles and parts imported under the free trade agreement with Canada and Mexico.
This can mitigate the blow to vehicles with twists and turns throughout the continent’s supply line. Tariffs for Canadian and Mexican parts that comply with the trade agreement will not take effect until the United States sets up a process for collecting these taxes.
Also Read: Trump’s automatic tariffs could bring rivals to Tesla and Elon Musk
The U.S. neighbors can use this window to try to avoid full implementation, even if it is a long shot.
Nevertheless, the move remains a broad aspect of a free trade agreement targeting the continent, which Trump renegotiated during his first term in office, which led to a tight integration of supply chains across North America. Canadian Prime Minister Mark Carney called the tariffs a “direct attack.”
Foreign brands will face the greatest pressure to rely heavily on imported vehicles. The modern risk in South Korea is welcomed to be damaged. Although the automaker and its affiliate Kia owns factories in Alabama and Georgia and announced plans for $21 billion this week’s U.S. expansion — it imported more than a million cars to the U.S. last year, accounting for more than half of the country’s sales.
Hyundai “still committed to long-term growth in the U.S. auto industry through local production and innovation,” the company said in a statement.
According to SK Securities Co. Seol Securities Co. Hyuk Jin Yoon, Hyuk Jin Yoon, Hyuk Hyun and Kia may have to pay up to 100 trillion won ($7 billion) in tariffs per year.
Toyota Motor Corp, the world’s largest automaker, despite four assembly plants in Kentucky, Indiana, Mississippi and Texas, as well as West Virginia and Alabama.
Detroit’s automakers were not spared either. GM imports some Chevrolet Silverado pickup trucks from factories in Mexico and Canada, an entry-level Chevrolet Trax compact SUV from South Korea and its family cars, the Chevrolet Equinox Crossover SUV. Last year, GM sold over 200,000 Equinox and Trax, one of its cheapest vehicles. The automaker also made electric versions of the Mexican Spring Equinox and blazers.
Stellantis NV makes Jeep Compass and Wagoneer S SUV in Mexico. The company imported its Chrysler Pacifica minivan from Canada and from Italy the compact Dodge Hornet and Fiat 500.
Even if Ford is more American-dominated than its cross-city rivals, it still faces its own pain. The automaker built entry-level Mavericks’ small pickup trucks in Mexico, as well as Mustang sport compact SUVs and Mustang Mahkar electric cars.
