The new tariffs imposed by President Donald Trumps on car parts from China will have a big impact on the auto industry and could effect consumers the most beginning on January 1, 2019.
The latest tariffs will start on September 24th by adding a 10-percent levy on imports from China and will affect more than 100 car parts. The tax will increase to 25 percent by January 1st. Other items included in the tariffs include baseball gloves, network routers and even food seasonings.
President Trump tweeted, “Tariffs have put the U.S. in a very strong bargaining position, with Billions of Dollars, and Jobs, flowing into our Country – and yet cost increases have thus far been almost unnoticeable. If countries will not make fair deals with us, they will be ‘Tariffed!’”
These new tariffs will be applied to any car sold in the U.S. that is built on parts imported parts from China. The tariffs will increase the price of new vehicles along with monthly payments if it is being financed. A higher MSRP will also mean higher rates from car insurance companies.
Analysis conducted by The National Automobile Dealers Association found that a 25 percent tariff increase would increase the price of a car sold in the U.S. by $4,400. Higher sticker prices can also mean customers are less likely to purchase a new car. Research commissioned by the National Automobile Dealers Association found the new tariffs could also result in 2 million fewer new cars sold every year.
The tariffs were added to increase China’s pressure to change trade practices that the president says are hurting U.S. businesses. The U.S. wants China to allow American companies more access to their market without having to share technological advances as a trade-off. New trade deals could potentially increase jobs in the manufacturing industry in the U.S.
China’s economy is slowing down and these new tariffs are expected to make it worse, making it harder to the country to retaliate. However, they are not out of ammunition just yet. Following the new tariff announcement, China said it would impose tariffs on U.S. goods worth $60 billion. China will place levy rates of 5 or 10 percent on more than 5,000 American goods, including meat, nuts, clothes, chemicals and machinery.
The new tariffs will hit home, too. Researchers at Morgan Stanley found estimate the tariffs could reduce the economic growth in the U.S. by .1 percent this year. The U.S. is experiencing continued economic growth and has the lowest unemployment rate since 2000.
The auto industry is not the only industry that could be affected. The National Association of of Chemical Distributors found that nearly 28,000 chemical distributor and supplier jobs may be eliminated with the new round of tariffs. After the first set of tariffs earlier this year, American soybean farmers took a hard hit.
Big tech companies like Intel and Apple have also expressed concerns about the new tariffs. These new levies could increase the cost of their products as many of their products are made in China. Research by the Consumer Technology Association found that the tariffs would impact the tech industry greatly, with increased costs at from $900 million to $1.8 billion. Earlier this month, Apple filed an objection to the new levies because they would increase the prices of popular Apple products like the Apple Watch and Airpods.
It is unclear if the trade talks scheduled for later this month will still take place.