Donald Trump has decided that 25% tariffs on cars imported from abroad will soon take effect. For Canada and Mexico there will be a small extension, but then chaos will ensue in Europe too, especially for Stellantis, which risks a drastic decline in profits of up to 75%, according to analysts. Despite everything, Trump will proceed on this path.
Could Trump’s tariffs, which might cause billions in damage, be just a bluff?
Almost the entire global automotive industry opposes Trump’s tariffs, including some American brands that still do business with foreign countries, if not for cars, then with spare parts or batteries. Even Tesla, owned by trusted friend Elon Musk, strongly disagrees with the protectionist measure. Despite this, the US President has said he will proceed anyway.
Trump expressed no concern about the rising prices of foreign cars. In fact, he hopes this will push American consumers to purchase cars manufactured in the United States (despite the fact that Stellantis, Ford, Tesla, and others now rely on foreign operations for some of their activities).
The President has said he is “open” to negotiating on tariffs, but only if countries have something “of great value” to offer in exchange. Trump is therefore convinced that this strategy can grow the American economy and punish foreign companies at the same time. Perhaps, however, he hasn’t properly considered the historical context. Our recent past clearly shows how protectionist strategies rarely benefit industry, but evidently the new administration wants to confront real data before giving up. Another possibility: the President might be “bluffing,” hoping to secure excellent deals during negotiations.
On April 2nd, Trump will announce the details of the tariffs. Meanwhile, some have already calculated that it could impact $1 trillion in trade. We will see, once the cards are revealed, what foreign states decide to do, especially major ones like Canada, Mexico, Europe, China, and South Korea.
