A seismic wave through the world automotive industry jumped from former US President Donald Trumps signing of an executive order doubling tariffs on any automobiles imported into US built overseas. With a focus on automobile production at home, the move has already sparked some market turbulence and lead to robust reactions from US allies who are now amplifying their own retaliatory options.
The introduction of the 25% car import duty is likely to have a major impact on car makers in Europe, Asia and North America will potentially sparking large price rises for consumers in the U.S. The move has set off alarms within the automotive industry which depends on cross-border supply chains and global trade. Taking everything into account, news caused financial markets to have an instant reaction as automotive stocks had a sharp sell-off and world indices sold off massively. Investors are as much in fear of the future of international trade relations as anyone and the automotive market appears certain to see some bumps in a post-trumps landscape.
Prime US allies like the European Union, Canada and Japan have sounded fears out loud re this tariff order by re-wrapping it as protectionist and an imminent trade war. Officials from these countries have alluded to retaliatory measures, including the imposition of tariffs on US-manufactured goods as well. This has led to fears of another round of retaliatory global trade wars that would significantly impact the automotive sector and overall economy both globally. Tariffs in conjunction with another 25% tariff and retaliatory measures will send the automotive market into a tail spin, lethal for producers as well as buyers, analyst worry.
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The most it is going to be felt by European and Asian automakers who depend on exports to the US market. But the US domestic car makers as well will also confront challenges from higher costs for import parts and supply chain issues, too.
There is no telling what the long-term impact of Trump’s tariffs are. The dynamic is changing rapidly and we prepare for a range of business disruptions as well as increased market volatility in the global automotive industry. What happens in the next few weeks could determine just how big of a swan dive we take, and if a global trade war is in store.
