New US tariffs a headache for foreign automakers

Most brands have at least one auto plant on US soil where they employ thousands of workers

NEW YORK: US President Donald Trump’s threat to impose steep tariffs on auto imports will hit foreign automakers that export a large number of vehicles to the US market, but many also manufacture cars domestically.

Most of these brands, such as Mercedes and BMW as well as Nissan, Honda and Volkswagen, have at least one auto plant on US soil, where they employ tens of thousands of workers.

These automakers have invested billions of dollars in their US facilities. Toyota and Mazda announced at the start of the year plans to build a $1.6-billion joint facility in Alabama that will be capable of producing 300,000 vehicles a year. Volvo Cars, which plans to open a plant in South Carolina by the end of the year, has warned that new import duties would affect its investment plans.

In 2017, about 17.2 million vehicles were sold in the United States, according to AutoData, which compiles figures from manufacturers and dealers.



Nearly 8.7 million of these were imports, according to the Centre for Automotive Research, mostly from Mexico and Canada - partners in the North American Free Trade Agreement - as well as from Japan, Germany and South Korea. Since the start of this year, the share of domestically manufactured autos sold in the US has fallen to 50.1%, down from 51.1% over the same period in 2017, according to Edmunds.com.



At least 82% of Volkswagens sold in the US were imports, according to Edmunds, as well as 55% of Toyotas, 57% of Hyundais, 70% of Mercedes-Benz and 68% of BMW.



On the other hand, more than half the cars sold in the US by the “Big Three” in Detroit were made locally: 80% for Ford, 60% for General Motors and 55% for Fiat Chrysler. Honda is the sole foreign automaker manufacturing a large majority of its locally sold cars in the United States.

Published in The Express Tribune, May 27^th, 2018.

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