Rates on car parts that enter the US will take effect

An import load of 25% on engines, transmissions and other important car parts has come into force in the US, so that the pressure on an industry finds its way through a bush of policy changes.

The new rate comes days after Donald Trump illuminated the measure In response to business care, but did not eliminate this.

The US President has said that the new rate, together with an import tax of 25% on cars that were in force last month, is intended to force car manufacturers to do more production in the US.

But analysts said that immediate extensions in the US would probably be at the expense of production elsewhere, while they also lead to higher costs for companies – and ultimately higher prices for customers.

For the time being, companies are protected from pain, such as Concern about price increases has led to an increase in sales.

General Motors and Ford reported this week this week that the revenue growth of double digits continued in April.

But GM also warned that it expected no less than $ 5 billion (£ 3.7 billion) in new costs this year as a result of the rates, including around $ 2 billion in costs on cars that it does in South Korea and exports to the US.

Managers said they now expected the prices to rise around 1%, rather than to fall as previously predicted.

In a sign of the unrest, other car companies, including Stellantis, maker of Jeep, Fiat and Chrysler, drew financial guidelines for the coming year, referring to the liquidability of the situation.

“We remain subject to extreme uncertainties,” Doug Ostermann, Chief Financial Officer of Stellantis, told analysts this week.

Almost half of the vehicles sold in the US last year were imported from outside the country.

When Trump announced Plans in March to touch cars and certain car parts with 25% rates, an announcement that came in the middle of a crowd of other rates, shock waves sent by industry, warnings for higher prices and risks for production and sale.

The president has since mitigated his policy, especially with regard to Mexico and Canada – important parts of the supply chain of the industry, due to decades of free trade between the three countries.

As it looks now, parts made in Mexico and Canada will save the tasks in accordance with that free trade agreement. Officials had initially described that exemption as temporary, but after the issued customs places that were published this week, analysts said it seemed probably to stay now.

This week Trump has also signed measures to protect companies at the same item on the same item, while setting up a two -year system that car manufacturers can use to reduce the tasks that they have to pay on parts imported from other countries and are used in cars assembled by the US.

The administration had also said that companies made in Canada, which are imported into Canada and Mexico would not be charged at the rates for the US contents made in the US.

“The changes that have come in recent days will make it easier … But it is still a dramatic change in the market,” says Stephanie Brinley, chief analyst of the Automotive at S&P Global Mobility. “It’s still a big rate.”

Managers at some companies have said they are investigating ways to increase production in the US to reduce the new costs.

General Motors said it had expanded truck production in his factory in Fort Wayne, Indiana, with around 50,000 as a result of the rates. This week it also said that it would reduce the output in Canada.

Mercedes also said it had flexibility to expand in his factory in Alabama.

Art Wheaton, director of Labor Studies at Cornell University, said that the US could see more of such announcements in the coming months, but he did not expect that he would see new factories being built quickly, given the meaning of that investment and how quickly the situation changes.

“If I am going to make a decision of several billion dollars … I wouldn’t do it in a market that is so unstable,” he said.

The administration has said that it is working on trade agreements with important countries for industry, including South Korea and Japan.

Trump can also adjust his policy if signs of economic damage arise, Mr. Wheaton said.

“Everything is pretty good now,” he said. “I don’t think the full impact of those rates has been hit.”