Trump tariffs are already reducing cars imports and idling factories

The rates of 25 percent of President Trump in imported vehicles, which came into force last week, are already sending tremors through the automotive industry, which leads companies to stop sending cars to the United States, close factories in Canada and Mexico and fire workers in Michigan and other states.

Jaguar Land Rover, based in Britain, said he would stop temporarily exporting his luxury cars to the United States. Stellantis inactively factories in Canada and Mexico that manufacture Chrysler and Jeep vehicles and fired 900 US workers who supply those engines and other parts.

Audi, Volkswagen's luxury division, also stopped car exports to the United States from Europe, telling dealers who sell what they still had in their lots.

If other car manufacturers perform similar movements, the economic impact could be severe, which leads to higher cars and generalized dismissals. Tariffs on cars are among the first of several specific levies of the industry that Trump has in the sights and could offer early clues about how companies will respond to their commercial policies, including if prices increase or increase manufacturing in the United States. The president has said that he also wants to tax imports of medicines and computer chips.

Applying the new rate to imported cars could increase its cost for consumers in thousands of dollars, drastically reducing the demand for those vehicles. For some Jaguar Land Rover or Audi models, tariffs could amount to more than $ 20,000 per car.

Although much of the initial impact of the rates has been detrimental, in at least one case Mr. Trump has had the expected effect of increasing production in the United States. General Motors said at the end of last week that the production of light trucks in a factory in Fort Wayne, Ind.

The long -term impact of rates of 25 percent is not clear. Many automobile manufacturers are still trying to discover how to avoid the increase in prices that consumers can no longer pay new cars. Investors are pessimistic. The actions of Ford Motor, GM and Tesla have fallen in the last days of commerce.

“All in the automotive supply chain focus on what they can do to minimize the tariff impact on their own balances and prices,” said Kevin Roberts, director of Economic Intelligence and Market in Cargurus, an online purchase site.

But car manufacturers had never had to deal with the imposition of tariffs so high with so little notice. Nor have they had a little idea of ​​what the president will then do, analysts and distributors said.

“The traditional play book is not enough,” said Lenny Larocca, who leads the automotive industry team at the KPMG consulting firm.

Mr. Larocca predicted that automobile manufacturers would focus more and more on producing vehicles and trucks of larger and more heavy sports services. These vehicles, many of which are assembled in the factories of the United States, are usually the most profitable and provide companies with the most space to absorb the cost of tariffs instead of passing it to customers.

Many modern assembly lines can produce several models, giving companies flexibility to change the most profitable vehicles and leave vehicles that do not earn so much money. Mercedes-Benz has said that it will take advantage of flexible assembly lines in its factory in Alabama.

This strategy comes with disadvantages. It can be more difficult for car buyers to find new cars at moderate prices. Already, the average price of a new car is almost $ 50,000.

Analysts say this is clear: tariffs will not drive companies to open new factories or reopen closed plants immediately. The companies will not take that expensive step until they are sure that the rates are permanent and that investing hundreds of millions, or billions, of dollars in the new production capacity will be worth it.

“I have not seen any great movement,” Larocca said. “It's waiting and seeing.”

Some automobile and suppliers manufacturers expanded their US operations before Trump assumed the position. Often, they were reacting to the coronavirus pandemic, when it became risky to trust distant factories for critical parts. Others made large investments in factories that make electric vehicles or EV batteries to take advantage of the incentives offered by the Biden administration.

ZF, a German pieces manufacturer, spent $ 500 million last year to expand a factory in South Carolina that produces transmissions for BMW and other car manufacturers. And in recent years, GM has opened two new US battery factories. With a South Korean partner, LG Energy Solution, to make the most important component of electric vehicles.

In the short term, some foreign car manufacturers can simply stop sending vehicles to the United States, either because they can no longer make profits or because they can earn more money elsewhere. That may be the case with Jaguar Land Rover. The company, known for luxury sports utility vehicles manufactured in Britain, sells approximately a fifth of its cars in the United States.

If other companies stop selling certain models to Americans, consumers will have fewer vehicles to choose from and the remaining car manufacturers will have more margin to increase prices.

Until now, however, tariffs have not led to generalized price increases for new cars. Hyundai Motor said last week that it would not raise the suggested retail price of the manufacturer of Hyundai and Genesis Cars until June 2.

Of course, car dealers can increase prices, even if a car manufacturer undertakes not to do so. That happened a lot during the pandemic, when the supply of new vehicles was limited by the scarcity of computer chips and other parts.

Automobile dealers and manufacturers have reported fast sales in recent days, since people rushed to buy vehicles before tariffs came into force. The average time that a vehicle passed in the lot fell from 77 days at the end of January to less than 50 days in early April, according to Cargurus.

The demand has been especially high for Japanese brands such as Honda, Subaru and Nissan, apparently because buyers assume that they are imported, said Sean Hogan, vice president of Sierra Auto Group, owner of a dozen dealers in southern California. The three Japanese companies have factories in the United States, although some cars import.

Another tariff shock will come on May 3, when the Trump administration will apply car tariffs. That means that even cars manufactured in the United States will be affected because practically all vehicles contain components from abroad. Repairs will also become more expensive.

“The polite public is definitely making some movements to get ahead of rates, which I think is intelligent,” said Hogan.

But the long -term impact of Mr. Trump's commercial policies is still impossible to predict, he said. “This administration moves quite fast, and does not really know what will happen later,” Hogan added. “Open.”

Neal e. Boudette and Melissa Eddy Contributed reports.