Border Tax Could Cause Large Auto Companies To Suffer

Feb 08, 2017 10:51 AM EST | Carl Anthony Teves

Jaguar could undergo most of the hard trials if U.S President Trump implements a tax on the imports. Border tax may incite automakers to support U.S. parts acquirement and the production from the assembly plants that exist.

Automakers from the outside of the country including Subaru, Mazda, Hyundai, Mitsubishi, and Kia may likewise consider some expansions on existing U.S. operations. As indicated by Baum and Associates LLC, Jaguar should raise the costs of its U.S. models over $17,000 each of the vehicles in the country to recover the costs that were lost due to the taxes paid on the import.

As for Ford, the company may just need to increase its prices over $282 for each car. Same situation for the General Motors, they may increase their car price over $995.

In addition to the evaluation conducted by the Baum and Associates, Volvo could also have a hike on its price by $7,600 while Volkswagen may work on a $6,800 cost increments per vehicle. In any case, if automakers around the globe have any aspiration or expectation in being competitive in the U.S, it is improbable that they would raise their car costs by more than a couple of thousand dollars and rather accepts a low amount of its sales as well as profits.

According to Dan Luria, an economist, and the Baum & Associates report lead author, if there will be slow in car sales, the implementation of the border tax would be a motivation for car makers to keep running their U.S operation in the expense of those who are in the country of Mexico and Canada. Fiat Chrysler Automobiles NV can also be encouraged to quicken the transformation of its production line in Sterling Heights to fabricate light pickups there rather than in Mexico and to include a medium and heavy truck production at the plant.

The proposed border tax prompts to the creation of up to 1 million other vehicles in the U.S. and an additional 50,000 more employment offer at the car assembly factories. At the same time, Toyota, Wal-Mart and other large companies have warned that prices from gasoline, water, food and other everyday needs may result in an increase in its prices.

 

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