Donald Trump announced that with effective from the Liberation Day (2nd April), all cars sold in America will have to pay a tariff of 25%. At first he said that some items will be exempted and later on including all components will have no exemption. Thus made the stock market went up and down according to his IBM (International Big Mouth).
The picture on page 1 shows that cars sold in America only Tesla is 100% manufactured in US, they will be benefitted most, but for other brands they have a lot of components made in Canada and Mexico, and even have to shuttle for 4 or 5 times through the border line for a component totally made, and is impossible to collect tariff for 4 or 5 times. So it takes some time to clarify the list and solve the technically problem of collection. Thus the whole process will take one month’s time from April 2nd to May 3rd. Therefore, the market fluctuation within this month will be quite unstable.
For car sales, if a vehicle is manufactured entirely outside the US, a 25% tariff will apply, along with additional levies based on the proportion of components made domestically or internationally. This will ultimately increase the retail price, leading to higher salary demands, increased after-sales service costs, and rising rent. Inflation will be inevitable.
Vehicles are just one of the items subject to tariffs, and more are likely to follow. However, many expect that Trump may cut some of the impending tariffs, given his unpredictable nature. Therefore, April 2nd is not a definitive deadline—neither is May 3rd, or even later dates.
About the Author
Daniel Yue has been an active investor since 1980, with experience spanning stocks, currencies, futures, metals, and bonds. A scholar of the Chicago School of Economics, he holds a Certificate with Distinction from Cambridge University and a degree in International Trading from National Taiwan University. He served as Chief Analyst for over 30 years and Chief Mentor at Sincere Finance. In 2017, he received an award from the University of Arizona for financial internship leadership.
The analysis and opinions expressed in this article are for educational purposes only and do not constitute financial advice. Investing involves risk. Please consult a qualified financial advisor before making investment decisions.
About the Author
Daniel Yue has been an active investor since 1980, with experience spanning stocks, currencies, futures, metals, and bonds. A scholar of the Chicago School of Economics, he holds a Certificate with Distinction from Cambridge University and a degree in International Trading from National Taiwan University. He served as Chief Analyst for over 30 years and Chief Mentor at Sincere Finance. In 2017, he received an award from the University of Arizona for financial internship leadership.
The analysis and opinions expressed in this article are for educational purposes only and do not constitute financial advice. Investing involves risk. Please consult a qualified financial advisor before making investment decisions.