WASHINGTON, D.C. — Uncertainty with international tariffs and the North American Free Trade Agreement could have one of the “biggest impacts” on automotive sales, Mike Wall, executive director of automotive analysis at IHS Markit, said at CBA Live.
“This industry — especially in North America and the U.S. — has really been predicated on the concept of a free trade zone that is North America,” Wall said. “There’s a lot of cross-border activity that goes on in the North American market that impacts the U.S.” Specifically, trade disruptions with steel and aluminum tariffs have been an issue the industry has been wrestling with for the past year. “It’s created some upper-pressure on [vehicle] costs,” he said.
Also looming on the horizon is a potential 15% to 25% tariff on automobiles and auto parts coming into the U.S. “If we carve out Canada and Mexico [from the tariffs], that helps because we bring in a lot of parts and vehicles from [those countries],” Wall said. “But, if we lump Canada and Mexico in, it’s about a 2-million-unit hit to U.S. light-vehicle sales.”
Tariffs imposed on imported vehicles and parts would raise the average price of imported vehicles by $5,800 and of domestic vehicles by $2,000, Wall said. “Ford F-150 is a great example,” he said. “All the V8 engines come from Canada. That’s a large component in terms of dollar cost.”
Ideally, NAFTA renegotiations to exclude Canada and Mexico from international tariffs will be addressed by Congress before the end of summer but, realistically, will “drag on at least for the foreseeable future,” Wall said.
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