Trump's tariffs are 'an epic proportions debacle' for the automotive industry

The “Day of Liberation” has arrived. Prepare to free yourself from the affordable prices of the vehicle.

As promised, 25 percent tariffs of President Donald Trump for imported vehicles entered into force on Thursday, sending the automotive industry in complete panic mode. Some analysts predict a price increase from $ 5,000 to $ 10,000 in new cars outside the door, while others still fight to wrap Trump's automatic tariffs. It was a nuclear level threat to the already unstable automotive industry, with little relief in view.

Trump's argument is relatively simple, if not sensitive: don't you like rates? Only buy a car made by the United States. The only problem is that there is no such thing. Even vehicles made in the USA. UU. They trust a complex supply chain that runs through the borders and through multiple nations. The average car contains approximately 30,000 individual pieces. Even cars produced in the country obtain 40-50 percent of their pieces from abroad, according to Dan IVES, the global technology research chief at Wedbush Securities, a financial services firm.

“Tariffs are a debacle of epic proportions for the automotive industry and US consumers, since the concept of a car made in the US. UU. With all US parts it is a fictitious narrative of fairy tale,” Iives wrote in a note to customers on Thursday. “The more people we talk about the automotive industry worldwide, it is clear that this tariff/politics of the United States will cause pure chaos to the global automotive industry and raise the prices of a typical car to an American consumer at $ 5K at $ 10K out of the doors.”

Other companies predicted an even greater price increase as the new tariffs began to enter into force. Anderson Economic Group concluded that tariffs could increase manufacturing costs by $ 4,000 to more than $ 10,000 per car, depending on the vehicle model. Battery electric crosses could see the largest increase of $ 12,000.

The effect could be even more pronounced at the lower extreme of the market, with many of the most affordable vehicles of GM, Ford, Kia and Hyundai produced outside the United States. The affordability is already a big problem for car buyers, with average transactions for new cars at $ 48,118 in January, according to market researcher Edmunds.

There are only 27 vehicles available below $ 30,000, four of which have already been discontinued, including Chevy Malibu and Nissan Versa. Many of these models come from Mexico, Japan and South Korea. Last year, these models represented 13 percent of all vehicles sold in the United States.

Giving tariffs to these vehicles as they arrive at the US According to Erin Keating, executive analyst at Cox Automotive.

“This is difficult news for an industry that already looks at a problem of affordability,” Keating added in a statement.

For decades, car property has been a distinctive seal of the American dream. We build our communities around the property of the car, squeeze traffic and reduce pedestrian spaces to give way to increasingly large vehicles. For most people in the United States, owning a car is not an option; It is a necessity to participate in daily life.

Consumers already faced high costs when financing new vehicles before tariffs arrived. One in 5 new car buyers is assuming seven -year loans to finance a new car purchase, in a sign of growing financial stress, says Edmunds. And a growing number of people with car loans You owe more than your vehicle is.

“Even with rates that remain relatively flat, the continuous dependence on extended terms and high monthly payments reveals how the purchase of challenging cars remains,” says Jessica Caldwell, director of Ideas at Edmunds. “And now, with automotive tariffs officially in force today, there is a risk of adding fuel to the fire, which triggers an interruption that could push vehicles even more out of the reach of many buyers.”

The Trump administration is considering other relief methods for car buyers. The White House said it is asking for tax exemptions to encourage purchases of vehicles made in the United States and pursue the deregulation for lower costs throughout the industry. But the result is uncertain.

With the prices that are expected to increase, many people who had been considering the purchase of a car are crowded in concessionairestrying to take advantage of prices prior to the rate. Consumer experts advise against panic purchases, but, of course, most people do not think rationally while seeing the news with growing anxiety.

“It is never worth going running and making a hasty decision from which you regret,” says Jake Fisher, senior director of Consumer Reports Automatic Test Center. “Even if the tariffs are here to stay, in a short time, the value of their exchange will also increase.”

Some car manufacturers are taking advantage of high inventories, the total number of new and used vehicles that dealers have for sale, to offer short -term incentives to panic buyers. Ford is offering employee discounts on most models, including Mustang Mach-E and Maverick, both built in Mexico, all buyers until June 2. Reuters information. Ford had more than four months of inventory in February, above the average industry of almost three months, according to COX.

Hyundai's response was to announce an investment of $ 21 billion in the United States to avoid the effect of tariffs. And others are adopting a more drastic approach. Stellantis said today Temporarily designing 900 workers in five of its US factories and production pause in assembly plants in Canada and Mexico.

Even Tesla, directed by billionaire Best Buddy Elon Musk, is exposed to these new rates. The company brings together its vehicles in the US, but 20-25 percent of its pieces are obtained from Mexico, according to a list of origins in part of the car published by the National Highway Traffic Safety Administration.

Tariffs will probably lead to more automobile manufacturers trying to negotiate agreements or exemptions with the administration. And ultimately, this is probably what Trump wants: to be the most important person in the room, in the center of chaos that helped create.