New Tariffs Threaten to Boost Prices of Imported Cars and Parts

Joshua Lockhart

The article that I read is about the new tariffs the trump administration is proposing for imported cars and parts. What this does is it raises cost for foreign auto makers which means they have to adjust their pricing strategy accordingly. Depending on the companies pricing strategy this could be difficult. If they are profit oriented this new tariff could decrease auto makers profit significantly. Because of this many auto makers will be forced to raise prices to account for the tariff on their products. this change in price effects the consumers significantly. The standard price for a vehicle in the market will increase putting more financial burden on consumers. This extra burden could be a deal breaker for many prospective consumers. Therefore sales may decrease significantly after the addition of these new tariffs. the new tariffs are not only effecting foreign automakers but domestic ones as well. Because of the fact that 40%-50% of domestic vehicles are assembled using foreign parts, domestic automakers may have to increase prices as well. What this does is it eliminates a possible cheaper domestic alternative for consumers. This tariff is essentially an extra expense for the consumer to bear which is not good for the automakers. When price increases demand decreases, which implies that the automakers will sell significantly less vehicles after the tax is imposed.

I chose this article because i thought it was interesting to see how much a tariff could effect both foreign and domestic markets. As a possible consumer i think that an increase in price would effect my decisions. if im not in need of a car desperately then i dont see the need to buy one at a higher price. because cars have such a long life i could wait until prices are considerably low to buy a new vehicle.

link to article:https://www.wsj.com/articles/new-tariffs-threaten-to-boost-prices-of-imported-cars-and-parts-11550236094