American protectionism is the new frontier of international trade. First were the customs duties on steel and aluminum, respectively at 25% and 10%, coming from China, then those relating to imports from the European Union, finally from Canada and Mexico, despite the negotiations for the renegotiation of NAFTA.
Today, it is the customs duties on cars, also at 25 percent, that are worrying the markets. Trump threatens new protectionist measures on cars, a measure that will cost 45 billion dollars annually. Hefty bill worth $5.800 more for every car imported into the United States from Europe, Korea, China and Japan. The estimate was made by the Association of Automobile Manufacturers (Aam, Alliance of Automobile Manufacturers), a group that represents General Motors, Toyota Motor Corp, Volkswagen AG. “Auto tariffs will generate an estimated $45 billion in taxes for American consumers. A measure that will cancel all the benefits of the tax cuts introduced by the White House in one fell swoop,” said association spokeswoman Gloria Bergquist.
These new duties will impact not only cars understood as the final product, but above all the entire component sector: “We have finished our dossier on duties on European cars which for a long time benefited from the United States. In the end everything will be uniform, and it won't take much time ”, reads the American President's twitter profile. For its part, the European Commission has made it known that it is ready to act accordingly in the face of new threats from the United States.
It should be noted that the supply chain of individual car components is closely interconnected between the various countries and various sectors: only from the other two Nafta countries, Mexico and Canada, car components amounting to at least 60 billion dollars arrive; practically, according to estimates by the Center for automotive research, about half of American components are born overseas. Furthermore, 30% of the braking systems come from China, 21% of steering wheels and suspensions come from Japan, as much as 64% of the seats come from Mexico: if we continue in this way, raising walls and tariff barriers it is probable that cars can be purchased in single pieces and become collector's models. Customs duties, although in the short term they can represent a benefit for those who impose them, force us to rethink international economic dynamics: it will be more expensive to relocate and the production cost and, therefore, the cost of selling each car will be more expensive.
