The United States has recently threatened to impose a 25% tariff on imported vehicles and vehicle components. Yet, this decision has triggered unnecessary friction and tension with our international trading partners. The tariffs will go into effect on April 2. Their goal is to make US manufacturing more competitive by “rebalancing the playing field” in American trade negotiations. Luckily, the European Union is taking concerted action to push back against these anti-democratic measures. They have appealed for an exemption, describing the series of events as “highly unfortunate.”
Beginning of April 3, 2023, any business that imports a vehicle into the US will have to pay new fees. Taxes on automobile components aren’t planned to go into effect until May or afterwards. The European Union was the most vocal opponent of these tariffs. They are preparing to retaliate with their own tariffs on American-made products. France has been one of the strongest advocates of this joint approach, calling it critical to stand strong against these trade measures.
“We are in a situation where we are being targeted. Either we accept it, in which case this will never stop, or we respond,” shared Eric Lombard as he discussed the EU’s stance.
The tariffs are likely to have a very pronounced effect on US economic relations with Japan and Mexico. Mexico is now the largest exporter of automobiles to the U.S. The new tariffs and duties leave that potential behind, deeply upending what has evolved as a bilateral trade between these two powerhouses. The US imported about eight million light vehicles last year. This unprecedented surge, estimated at upwards of $240 billion, involves enormous cost considerations. Cambridge University experts predict that vehicle prices could increase by $4,000-$10,000 based on which model is hit by these new tariffs.
A key factor in that decision to impose these tariffs has been a highly strategic, long-term priority on shoring up domestic manufacturing industries. Yet this decision will have ripple effects that extend much beyond US borders. This would have major implications for global trade networks and economic stability. The European Union has called out the actions and is ready to deter by counteract those actions to defend its economic interests.
“We need to show strength and self-confidence,” stated Robert Habeck in response to the tariff announcement.