Trump introduces new tariffs on trucks and provides tax breaks for automakers
US President Donald Trump signed new orders expanding tax credits for the production of cars and engines in the United States, while also introducing tariffs of as much as 25% on the import of medium and heavy trucks and parts. These measures enter into force November 1st and, as stated, they are being introduced for „security reasons,“ with the goal of bringing as much production back to American soil as possible.
However, the move could deal a serious blow Mexico, which is the largest exporter of medium and heavy trucks to the US.
Trump also introduced 10% Customs duty on imported buses, while simultaneously announcing Expanded tax benefits for producers – which means that companies that assemble vehicles in the U.S. will be able to count on a credit in the amount of 3,75% from the recommended retail price, all the way to 2030.
Tax credits and protection of domestic production
The new relief applies not only to cars, but also to engine production i medium and heavy-duty trucks in the US. The goal is for manufacturers, such as GM, Ford, Toyota Motor, Stellantis, Honda i Tesla, to compensate for a portion of the losses incurred from earlier tariffs on imported auto parts.
Trump had previously emphasized that tariffs protect domestic factories from "unfair foreign competition," and the new move, according to him, should help brands like Peterbilt, Kenworth (owned by Packard) and Freightliner (owned by Daimler Truck).
Reactions from the automotive industry
Director of the company Ford, Jim Farley, stated that this decision will help reduce the production costs of auto parts in the US and that the new tariffs on imports of heavy trucks will „level the playing field.“.
On the other hand, U.S. Chamber of Commerce warns that such measures could disrupt trade relations with allies, as the largest truck exporters to the US are precisely Mexico, Canada, Japan, Germany i Finland — countries that do not pose a security threat to America.
Financial effects
New tariffs could further burden the automotive industry, which is already facing high costs. GM estimated earlier this year that the tariffs will cost the company about one trillion four hundred forty-five billion, while Ford reported a loss of about $3 billion.
The Trump administration expects the expanded credits to motivate manufacturers to relocate more of their plants to the US, thereby increasing domestic production and creating new jobs. However, many economists warn that the consequences for vehicle prices and international trade could be serious.
SOURCE: FINANCIAL EXPRESS PHOTO: PEXELS
