Something is definitely brewing for many companies worldwide. Due to significantly increased new customs duties, trade with the United States of America could become quite tricky in the future. Things have already gotten rough in the automotive industry!
High U.S. Tariffs Impact the Automotive Industry
US President Donald Trump’s tariff shock not only caused share prices to free fall in the stock markets, but it has also unhinged many companies. Among them include car manufacturers, where one of them has already pulled the emergency brake: Jaguar Land Rover from the UK will no longer deliver cars across the pond to the USA in April.
British news portals reported Jaguar Land Rover is currently sounding out with its business partners how to deal with the new rules in transatlantic trade. Unexpectedly quick reactions such as the delivery stop to the United States are probably also necessary to react to the 25 percent punitive tariffs on imported cars. However, this does not change the basic idea that the USA is an important market for Jaguar Land Rover.
The British car manufacturer is heavily dependent on exports to other countries. Of almost 780,000 cars that rolled off the production line in the UK last year, a whopping 77 percent were destined for export, according to figures from the Society of the British Motor Trade (SMMT). Cars are one of the most important things the British sell to the USA, but other British services are also in great demand in the States.
VW Also Takes Action
The British are not alone in suffering from the new US tariffs. German manufacturers such as Volkswagen (VW) also come under such tariffs. Last year, for instance, the Wolfsburg-based company sent almost 100,000 units of the VW Tiguan to the USA. Whether that will happen again this year is questionable because should import duties of up to 25 percent be in place, the Tiguan will, of course, also become noticeably pricier in the USA.
VW’s response to this? The manufacturer now wants to place literal stickers on its cars set to be delivered to the USA. This will show the breakdown of its cost, including the amount of duties incurred.
This is meant to inform American customers and, in the best-case scenario, ensure they understand what’s going on and are willing to pay higher prices. However, it is more likely that VW and other manufacturers in the USA will face enormous challenges if they do not directly manufacture their vehicles in the States and avoid the import duties in this way.
Source:
The Guardian, Auto Motor Sport
