TRUMP TARIFFS & CANADIAN MADE CARS
HARD TIMES REVING UP FOR CANADIAN AUTOMOTIVE SECTOR
On Wednesday March 25th, the President signed a proclamation which invoked s. 232 of the Trade Expansion Act of 1962, s. 604 of the Trade Act of 1974 and Section 301 title 3 of the U.S. Code. This new Executive Order has imposed a 25% tariff on imports of automobiles and certain automobile parts.
What is a tariff?
A tariff is a duty imposed on the import of goods into a country, usually at a stated percentage, with the importer charged the corresponding amount based on the "value for duty" of the good. A 25% tariff on a $50,000 car is $12,500. Tariffs, if paid by a wholesaler or retainer are usually passed on down the supply chain and borne by the final consumer. In that sense, a tariff functions like a tax; the government imposes a price on goods making those goods more expensive. The hope is that by increasing the price of foreign goods, citizens will purchase homegrown alternatives.