Tariffs on imported vehicles were effective on Wednesday, a policy that President Trump said that would promote investment and jobs in the United States, but analysts say that thousands of dollars of new dollars will increase prices.
25 percent of the duties apply to all cars assembled outside the United States. From May 3, tariffs will also apply to imported auto parts, which will add the cost of cars collected domestically as well as for auto repair.
There will be a partial discount for cars made in Mexico or Canada that meet the terms of free trade agreements with countries. Car manufacturers would not have to pay duties on some parts such as engine, broadcasting, or batteries that were created in the United States and later installed in cars in Mexican or Canadian factories.
This provision will reduce the impact on vehicles such as Chevrolet Equinox Electric Vehicles, which is assembled in Mexico, but includes a battery pack and other components made in the United States. General Motors will pay only one tariff on the part of the car built abroad.
At the same time, duty on parts will increase the cost of cars made in Michigan, Tennessi, Ohio or other states. This is because most of the cars exiting American factories have components made abroad, often the vehicle costs more than half.
According to data compiled by the National Highway Traffic Safety Administration, for example, there is about 90 percent of the value of some Mercedes-Benz cars made in Alabama.
The effect of tariff on individual vehicles will vary widely. Cars such as the Tesla model Y, or Honda Passport made in Alabama, built in Texas and California, is a high percent of the US-made parts and will pay less tariffs.
Tariffs will be the highest on cars manufactured abroad, such as Toyota Prius made in Japan or Porsche Sports Cars made in Germany.
Even those who do not buy new cars will be hit with tariffs as they will pay more for parts such as tires, brake pads and oil filters.
A series of auto repair and maintenance shops, Michael Holmes, a co-facing executive of Virginia tires and auto, said he and his suppliers would try to absorb the most increased costs initially.
“It’s not durable,” said Mr. Holmes. “It is a magical thinking to think that businesses will not pass on it.”
Analysts said that auto tariffs could also increase prices for cars used over time, analysts said that the demand for those vehicles has increased as many new new buyers become ineffective for buyers. Insurance premium may also increase as repairs will cost more.
States (T) Mexico (T) Germany (T) Japan
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