Jonathon Azzopardi, the President of the auto parts manufacturer Laval toolCan see clearly over the US Canada border from his desk in Windsor, Ontario, just 4 miles from Detroit. This week this view looked much more expensive.
On Sunday, President Donald Trump said the United States would start to place 25 percent Tariff For goods that have been imported across the Canadian and Mexican borders, there is a breathtaking reversal of the decades of free trade in all of North America. Both nations threatened to return with their own tariffs. Then, a last-minute appearance: In the late Monday, Trump said that the tariffs against both nations would “pause” because both nations undertake to increase their border security. The president has also proposed that Canada could avert the tariffs by becoming the 51st state, a proposal that horrified the Canadian.
If this 25 percent tariff in conjunction with retaliation tariffs from Canada increases almost inappropriate costs, says Azzopardi, partly because some of its products cross the US Canada limit for up to seven times over seven times during production.
Even with the break, the future is still cloudy – and terrifying.
“The uncertainty is actually a bit worse because we don’t know what will happen,” says Azzopardi.
The location of the company shows the difficulty of many in the car business, since the scatter shoe of the Trump management and the threat to the foreign policy approach endangers the complex and expensive chains that create the vehicles that drive the Americans every day.
In an example from laval tool, US-MAD steel comes from pennsylvania and is used to produce components that finally become forms for auto parts, which are then sent back to the USA, which is then returned in Canada, which is then Is used to produce a car component such as a bonnet that is then sent back to the USA in order to be added to other components in a certain order.
According to Alixpartner’s advice, tariffs in Canada and Mexico could affect automatic imports of around $ 225 billion. A quarter of the 16 million vehicles sold annually in the USA come from Canada or Mexico.
The tariffs could also significantly increase the costs of producing a new vehicle – through S&P Global Mobility up to $ 6,250. Companies must decide which of the costs they can bear themselves and which they will pass on to consumers in the form of higher prices.
The tariff break does not mean that the headache of the auto industry has ended. According to analysts, the manufacturers react to the uncertainty about the duties by being over the border in advance and by moving goods while they are still zariff -free. Companies on the other side of the border react to an influx of orders by storming and paying employees over time, and fear that the work will have less to do in the future.
It is currently more expensive to put these products to the USA because many companies are moving at the same time, says Paul Isley, Professor of Economics at the Seidman College of Business of the Grand Valley State University, who predicts the terms and conditions in West -Michigan, where many many cars Suppliers and car manufacturers are based. If you save this additional inventory, the costs. Local companies are also reacting in the United States by capturing the attitude, says Isley.
