Jonathon Azzopardi, The The president of the automotive parts manufacturer Laval toolIt can be clearly visible across the US-Canada border from his desk in Windsor, Ontario, just 4 miles from Detroit. This week, that view started to look much more expensive.
On Sunday, President Donald Trump said the United States will start to set 25 percent tariff On goods imported on the Canadian and Mexican borders, a beautiful reversal of decades of free trade across North America. Both countries threaten to retaliate with their own tariffs. After that, a regret at the end: At the end of the second day, Trump said tariffs on both countries will pause, because both countries committed to strengthening border security. The president also suggested that Canada could prevent tariffs by becoming the 51st state, a suggestion that made Canadians horrified.
If the 25 percent tax is passed, along with the retaliation tax from Canada, it will add an almost unable to control the company, Azzopardi said, partly because some of its products surpassed the border. The American-Cankada world is up to seven times during the production process.
Even with the pause, the future is still murky and scary.
The uncertainty is really worse, because we don't know what will happen, Azzopardi said.
The difficulty of the company shows the difficulties of many people in the car business, because of the dispersed and threatening approach of the Trump administration on foreign policies that are dangerous to community chains and. Expensive suppliers create vehicles that Americans drive every day.
In an example from the Laval tool, the US steel produced from Pennsylvania and is used to create the final components to become molds for car parts, then be sent back to the United States for processing for processing. , then completed in Canada, then used to create a car component such as the hood, then sent back to the US to be added to other components in a specific order.
Tariffs for Canada and Mexico can affect about $ 225 billion automatically imported related to automatic, according to AlixPartners consulting firm. A quarter of 16 million cars sold in the US every year from Canada or Mexico.
Tariffs can also significantly increase the cost of producing a new car to $ 6,250, according to S&P Global Mobility. Companies will have to determine what costs they can bear and they will transfer to consumers in the form of higher prices.
The suspension of tariffs does not mean the headache of the automotive industry has ended. Analysts say manufacturers are responding to uncertainty around the mission by buying in advance and by moving goods across the border while they still have no tariffs. The companies on the other side of the border are responding to a line of orders by cramming and paying for part -time workers, and fearing that the job now will mean less in the future. .
The bringing those products to the US quickly now because many companies are moving goods at the same time, Paul Isley, an economics professor at Seidman Business University at Grand Valley State University, predictor of conditions. Business in West Michigan, where many car suppliers and car manufacturers are based on. After that, that additional inventory storage is subject to holding costs. In the United States, local companies are also responding by keeping hiring, Isley said.