Import tariff on Mexican auto industry will hit US

Import tariff on Mexican auto industry will hit US

Import tariff on Mexican auto industry will hit US

30 December 2016

Senior consultant predicts U.S. auto industry problems antioxidanti duties


Alexander Klimov, photos Google

Senior consultant, automotive industry Daron Gifford of Detroit accounting and consulting firm Plante Moran noted that the current wave of American jingoistic protectionism promises that the introduction of high import tariffs and the renegotiation of trade deals will stop a number of companies, particularly from the automotive industry, from moving production to Mexico and other places.
However, let's step back from partisan rhetoric and look at the problem of "non-partisan" look, he says, a significant number, if not most, economists agree that the benefits from tariffs, no matter how well-intentioned they are called, are temporary, if at all, not illusory.
So, the increased customs tariff on goods from Mexico, for example, will negate all the activities of the NAFTA, which was carried out for over 20 years, and it will be a blow to many American manufacturers and suppliers who have invested over this period in Mexican industry. For example, Ford Motor Mexico saves about 40 percent of the costs of labour, against its level kontroliruemoi trade unions in factories in the United States. Manufacturers such as Nissan, GM, Honda, Mazda, Volkswagen, BMW, Kia and also FiatChrysler, or have already moved or planned to move production of small cars to the South of the U.S.-Mexico border. the

Actions and reactions

The restriction of imports of cars from Mexico may also encourage local businesses to redirect their exports to countries with more favorable trading conditions that will potentially lead to lower US exports.
In the future, increased tariff on auto imports from Mexico will only bring short-term relief, because, in the end, production costs within the U.S. will grow because of lower competition with imported products. For example, the steel tariffs have never worked well, resulting in the steel company are not reinvested profits, which has led to the strengthening of their competitiveness.
In addition, we must not forget that the industry leaders are always looking for ways of evasion from taxes and excessive tariffs. Last spring, for example, when the U.S. Department of Commerce imposed a 500 percent antidumping duty on Chinese cold-rolled steel, China has taken a clever workaround, began shipment of its first steel in Vietnam, and then under the view of Vietnamese in the United States.
Of course, advocates of protective duties pursuing good purpose the power to return America to her jobs, however, the production of compact cars and pickups such jobs in the US in the near future will be back for sure. Due to the fact that the American market this product is losing its share and its production is largely preoriented for export to other countries. The American compact car market will increase only if there is another rise in fuel prices and the prices for the cars themselves will remain low to be affordable to poor consumers.
If gasoline prices do not rise and small cars will not regain the popularity that consumers in the US completely turns away from them as too expensive for your pocket. So, the introduction of 35 percent duty would lead to overvaluation, for example, Ford Focus hatchback, 2017 basic $37 000 to $50 000!
So that the automotive industry need to remain flexible and see what will happen next. Suppliers also have to revise their production strategies and to build alternatives to be ready to test. They also may take a wait and see tactic, but the main thing here is not to overreact. the

higher costs

The point is that although a trade war and strain of inner strength and create trade barriers, they lead to increased wastage in the country, trying to defend himself, i.e. practicing protectionism. Policy incentives may be more effective in terms of preserving jobs, which can already be seen on the example of tax exemptions for carriers in Indiana with the aim of preserving jobs in the United States.
I hope that 2017 will be more "carrots" than whips for manufacturers to increase domestic U.S. production and investment and to prevent their transfer to Mexico.
This flexible approach may cause manufacturers to reconsider their decision, as well as total supply chain cost. It also wouldn't hurt for those who have already invested in Mexico, but can still change the vector of its future business strategy.
Economics of the automotive industry on a global scale is not as complex as the car itself. Performance improvement requires a long, thoughtful look "under the hood".

Workers on the Assembly line Mexican Ford get 40% less than their counterparts in the United States.

Shift of the Mexican plant of Nissan is happy to launch the new compact model.



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