Trump lowers tariffs: US car industry breathes up-what does that mean?

Trump lowers tariffs: US car industry breathes up-what does that mean?

Michigan, USA - President Donald Trump has signed a new decree to mitigate tariffs for car manufacturers, which came into force on Tuesday. This procedure is intended to prevent car manufacturers from being burdened several times by "overlapping" tariffs, in particular by the existing 25 percent tariffs on vehicles built abroad and additional tariffs on steel and aluminum. The regulation aims to give the car manufacturers time to move their supply chains back to the USA.

The decree enables companies to count the tariffs on imported individual parts on the taxable vehicles. Credits of up to 15 percent of the value of the cars assembled in the USA are planned. For vehicles that exist at least 85 percent in the United States are to be completely dispensed with. These relief also affect foreign car manufacturers that produce in the United States.

background and effects on the automotive industry

With this graded system over three years, car manufacturers are to be able to restructure their supply chains. The step comes shortly before Trump's planned celebration of 100 days in office in Michigan, where the three great American carmakers and numerous suppliers are located. Several car manufacturers therefore expect relief in the auto tariffs before Trump's trip to the state, since they are considered crucial for local industry.

At the international level, the EU is currently raising 10 percent inches on auto imports from the United States, while the United States only demand 2.5 percent for imports from the EU. These customs increases from Trump to 25 percent for all cars imported into the USA should protect the domestic auto industry from foreign competition. However, the US car maker has lost competitiveness in recent years, which is clear by the failure of General Motors in Europe and the difficulties of Ford on the old continent. Despite the protectionist measures, the US auto industry remains faced with structural problems, including a lack of quality awareness and inflexible production facilities.

a saturated market and the challenge of electromobility

experts describe the US car market as saturated and criticize the sluggish transformation to electromobility. The current demand for electric cars is sometimes so weak that these vehicles are often loss lovers for manufacturers. In addition, the customs announcements are a shock for the German auto industry, which traditionally has difficulties with US vehicles that often do not hit the taste of consumers.

Almost half of the vehicles sold in the USA come from abroad, and current trade agreements such as the USMC make it easier for US manufacturers to produce in Mexico or Canada. Experts fear that the new tariffs could endanger established supply chains and increase the prices for US consumers. Trump's protectionist course could endanger the desired renaissance of the US car industry.

Developments in the industry are of great importance for both domestic and foreign manufacturers. [OE24] reports that Trump's arrangement for customs reduction in a response to the challenges that the US carmakers can face can be interpreted. [ZDF] emphasizes that the structural problems of the industry raise serious concerns, especially in the context of a globalized auto industry.