Cars up to $ 5,300 more expensive by Trump
Proposals by President Donald Trump and the Republican Party to impose taxes or tariffs on products entering the United States, especially those coming from Mexico, would eliminate the profits of US automakers, according to a report.
Elaborated by consultancy Roland Berger, the study indicated that the tax at the border of the country, which Trump has said that in the case of Mexico could be between 20 and 35%, would cause the effect “exactly opposite” to the desired and Would eliminate jobs in the United States.
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Presented Wednesday in the German city of Berlin and Detroit, the report noted that if the border tax were imposed, US consumers would have to bear additional costs, the profit margins of automotive manufacturers would be reduced and their sales They would fall.
“For automakers, the most likely result will be intense margin pressure and reduced vehicle sales, possibly resulting in more job losses,” said Wolfgang Bernhart, partner of Roland Berger, in a statement issued with the analysis.
He explained that the tax would add an average cost of $ 3,300 per vehicle. Even vehicles made in the United States would experience a rise of $ 1,500 in costs because of the large proportion of foreign content.
The report, based on auto figures in 2015, noted that Asian vehicles would see costs rise by $ 2,000; While European models would see a rise of $ 5,300.
“The added manufacturing costs would turn the US market into a source of loss for almost all original (automotive) equipment manufacturers,” Bernhart explained.
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He pointed out that US manufacturers would lose so much of their profits in their important domestic market that these would extend to their operations globally.
These utility losses would not be offset by shifting production from abroad to the United States because of the costs of capacity rebuilding and the small and medium-sized automobile manufacturing “no longer economically viable” in this country.
The paper said that even taking into account the benefits that households would have if they paid less tax on a reform, “the higher cost of vehicles would erase all tax benefits for the average American household almost completely” .
The report also underlined that all major OEMs are producing most of their vehicles for the US market in the United States, where they have invested much more than in Mexico or Canada.
However, in the cases of small cars in particular companies can not even offset the cost of manufacturing vehicles in the United States so production in countries like Mexico “is inevitable.”
The paper also noted that the loss of US auto industry jobs before the recession (600,000 jobs eliminated between 2000 and 2009) has little to do with Mexico, where in that period only about 100,000 jobs were created in the sector Automotive
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Bernhart felt that as in other countries and sectors of industry, jobs are being lost in the US auto industry due to increased automation and the simultaneous increase in productivity.
“The proposed border taxes will not change anything about it. On the contrary, additional costs accumulate for US businesses and consumers. The result will be lower vehicle sales and fewer jobs in the local auto industry, “Bernhart emphasized.