If Trump changes auto tariffs for Canada, how much the prices will change?

If Trump changes auto tariffs for Canada, how much the prices will change?, Vladimir Volenyuk

Americans may face significant price increases for new cars if the negotiations on the North American Free Trade Agreement (NAFTA) do not go smoothly for Canada.

Since President Trump made an agreement with Mexico to revise NAFTA earlier, he gave Canada time before to make concessions that would allow it to join the pact. If the country does not do this, President Trump said that auto tariffs will be revised.

According to analysts, the projected tariffs for Canada, in which the US sells about 10 percent of its cars, along with auto parts, will undermine the US auto industry. If new tariffs are introduced, it will cause the following consequences for cars and auto parts: price increase by 25 percent. For a vehicle assembled in Canada, the price is likely to increase by a quarter. For example, the Dodge Charger, with prices now start at $ 28,995, will increase by 25 percent to $36,244. This could put the car out of reach for some buyers. "The result of such higher prices will be a decrease in sales," said Charlie Cheesebro, senior economist at Cox Automotive.

Also, such “tariffs can seriously disrupt the auto industry," Chezbro said. “The supply chain is very closely connected with NAFTA.”

Experts say that a revised agreement with Mexico may also affect American workers and consumers. For example, some sections of the trade pact are aimed at forcing automobile companies to open new plants in the US, instead of Mexico.

But the modern plants are more likely to be automated, said Frank Dubois, a professor at American University’s Kogod School of Business and a specialist in global supply chains. He added that instead of more jobs the pact could lead to more automation in the United States.

The agreement with Mexico also requires that 75 percent of automotive content is produced in a sales unit for cars sold in the United States, instead of the current 62.5 percent. As negotiations continue, future prices for the products of the American automotive industry are at stake.

The largest US automaker General Motors Co. (GM) plans to close the plant in the Canadian city of Oshawa, near Toronto.

On Monday morning, in Oshawa, workers were informed that after 12 months, the plant would no longer produce, despite the commitments made during the 2006 labor negotiations between General Motors Canada and Unifor, the union representing hourly factory workers.

According to The Wall Street Journal, by the end of 2019 about 2.8 thousand employees will lose their jobs. Of these, about 2,500 union members and about 300 other employees. It is unclear whether these actions will affect the Technical Center in Oshawa.

The plant in Oshawa has existed for 65 years. He is currently responsible for the final assembly and painting of the Silverado and Sierra models, which are shipped here from Fort Wayne, Indiana, along with co-production of the Chevrolet Impala with Hamtramck and the production of all Cadillac XTS models in North America.

The closure of Oshawa is part of a global restructuring aimed at moving towards auto-driven cars with lower emissions and fully electric models. Also, GM announced 6 models that will be completely discontinued within 12 months. GM plans to kill off a couple of great and a few not so great cars as part of its restructuring. None of the vehicles GM axed were SUVs or crossovers. 

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