Car expert explains impact of newly announced Trump tariffs

(27 Mar 2025)
RESTRICTION SUMMARY:

++SOUNDBITES SEPARATED BY BLACK FRAMES++

ASSOCIATED PRESS
Birmingham, United Kingdom – 27 March 2025
++VIDEO CALL++
1. SOUNDBITE (English) David Bailey, Professor of Business Economics at the Birmingham Business School:
"So what Trump did essentially was to say that as from the 2nd of April, there’s going to be 25% tariffs, or a tax, on all car imports from anywhere in the world. So essentially, car firms in Japan, in South Korea, in Europe and Canada, in Mexico are going to be really heavily affected by this. It’s not only cars, by the way. There was a later clarification to say also components, which is going to be self-defeating I think, because ultimately what Trump wants is more production in the U.S., fewer imports. But that production in the U.S. also depends on components. So ultimately, this is going to mean higher prices for U.S. consumers and it will add to inflation."
++BLACK FRAMES++
2. SOUNDBITE (English) David Bailey, Professor of Business Economics at the Birmingham Business School:
"The U.S. is kind of cutting itself off from the rest of the world. The U.S. carmakers tend to focus on big gas guzzling pickups, which places like Europe, where petrol, gasoline is expensive, don’t want to buy. So this is just going to isolate, I think, U.S. producers even further. And we’ll probably see the rest of the world just get on with it. Trade more with each other and leave the U.S. out of it."
++BLACK FRAMES++
3. SOUNDBITE (English) David Bailey, Professor of Business Economics at the Birmingham Business School:
"I think it (the tariffs) also will try to appeal to his core blue collar, working class base. Although in the long run I think there will be detrimental impacts because of higher costs in the U.S. But I think he will probably do it. I think the interesting thing from a U.K. point of view is whether the Labour government can negotiate some sort of opt out on the basis that U.K. – U.S. trade is actually pretty balanced."
++ENDS ON SOUNDBITE++

STORYLINE:
U.S. President Donald Trump said Wednesday he was placing 25% tariffs on all auto imports, a move the White House claims will foster domestic manufacturing.

However, experts say the tariffs could also put a financial squeeze on U.S. automakers that depend on global supply chains.

"It’s not only cars, by the way. There was a later clarification to say also components, which is going to be self-defeating," said David Bailey, Professor of Business Economics at the Birmingham Business School in the U.K.

"Production in the U.S. also depends on components. So ultimately, this is going to mean higher prices for U.S. consumers and it will add to inflation," he explained.

Trump argues that the tariffs will lead to more factories opening in the United States and the end of what he judges to be a “ridiculous” supply chain in which auto parts and finished vehicles are manufactured across the United States, Canada and Mexico.

To underscore his seriousness about the tariffs directive he signed, Trump said, “This is permanent.”

Shares in General Motors fell roughly 3% in Wednesday trading. Ford’s stock was up slightly. Shares in Stellantis, the owner of Jeep and Chrysler, dropped nearly 3.6%.

"The U.S. is kind of cutting itself off from the rest of the world. The U.S. carmakers tend to focus on big gas guzzling pickups, which places like Europe, where petrol, gasoline is expensive, don’t want to buy," said Bailey.

The tariffs on autos would start being collected on April 3, Trump said.

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