U.S. tariffs on the auto sector would substantially raise the sticker price of cars, experts say
If the looming rates of 25 % on the automotive industry go on on April 3, as previously announced by the United States government, experts say that they will have a huge impact on the price of cars for the Canadians.
The administration of the President of the United States Donald Trump announced last week That a 25 % tax on all completely built vehicles imported into the United States will come into force on April 3. The figure of 25 % also extended to some key car parts, including engines, transmissions and electrical components, and the White House has left the door open to a sampling on several cars along the road.
Colin Mang, an assistant professor of economics at McMaster University, says that the rates take place in the United States and how Canada reacts will have an impact on how much the price of a car increases, but the amount in dollars could increase from $ 1,000 to $ 8,000 cdn.
“What we will see is that the prices start to increase in the United States and this will also have Spillover effects here in Canada, because the prices will follow each other,” said Mang.
While there are still many variables at stake, the experts of the automotive industry say that prices for many cars could increase significantly, although there are models that may not be interested.
The retaliation rates by Canada would add only the increase in prices, according to Mang. While there are about a dozen car models that are assembled in Canada that may not be affected by the rates, the interconnected supply chain that sees Parts of Criss-Cross North America cars many times Before they end up in a vehicle they will be affected.
Mang says that Canada exports about 1.1 million cars to the United States every year, therefore rates on the national automotive industry it could mean potential jobs losses.
He observed that these changes would also cancel the decades of work carried out since the beginning of Automatic pact of 1965who tried to build a singular North American automotive industry whose benefit to both countries would benefit.
Charles Bernard, chief economist of the Canadian Automobile Dealers Association, agrees on the fact that the rates would have been quickly followed by an increase in prices. He says that the current offer of cars on the lot would limit himself to slightly increase the increase in the price, but as soon as those cars are sold, the adhesive price would increase.
“It would be a significant amount of money in a world where cars were not already cheap,” Bernard said.
Even those who look at non -American car manufacturers will be unfortunate, he says. The production for brands consumers could associate with Korea or Japan which often takes place in North America still, so they will probably see the same types of increases, according to Bernard.
The South Korean car manufacturer Hyundai has already warned Its prices could increase if the 25 % rate of the United States entered into force.
The Canadian automotive sector is at the limit after the Trump administration has announced 25 % rates on all cars imports, raising fears of factory arrests and mass layoffs in a sector that supports hundreds of thousands of jobs.
Tariff uncertainty already has an impact
Mang says that for anyone on the market for a new car, trying to buy a vehicle before rates and mutual measures arrive would be an intelligent choice. He says that interest rates have also decreased, giving potential buyers another reason to buy first rather than after.
But to dealers, the anticipation of rates on April 3 already has an impact. Greg Carrasco, CEO of Direct Nissan in Mississauga, says that Price Panic has kept car buyers away.
“There are many doubts … in the air and we see it,” said Carrasco. “We are sitting [in] a keeping model. “
He says that he and other retailers in the largest area of Toronto use low interest rates and offers of no payment for the first six months on used cars in an attempt to attract buyers. He says that these affairs should have cars flying away from the parking lot, but instead sales have been quite moderate.
Carrasco says that it is a frightening moment to be a car trader, since there is not much that he can do if not buy cars now and hope that they can resist the storm. “We are just keeping our fingers crossed on the fact that the economic of the cheap will be in favor,” he said.
Mang agrees on the fact that uncertainty due to rates is having an impact. It indicates the trust of consumers, which has dropped drastically in recent weeks. The Council of the Canada Conference puts the Figure at 52.6 points – 12 points down for the month of February, which is the largest one and a half year reduction.
“People are really very worried,” Mang said. “They are worried about their work. They are worried that the economy is going to a recession, and therefore they are not really thinking about those big purchases like a new car.”
Bernard says that there are some indications that the market could soften. He says that the February sales numbers show a light dive (which can be partially explained by an expected drop in sales of electric vehicles since the incentives to buy EV in Quebec ended last month) and observes that the cars are sitting much longer. He says that that factor at the top of the commercial war will be negative for dealers.
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The best thing that people interested in the purchase of a car can do is to visit their local dealer, which according to him is more suitable to explain where you can make savings on costs with the tariff situation that changes quickly.
“It may not always concern what is on the internet or what Trump is saying,” Bernard said. “The direct connection or the only way [you] It can speak in a sense with the … construction of the company that the car is through the dealership. And I think dealers will be well prepared. ”
