Soon the whole auto world will suffer if Trump raises duties

Soon the whole auto world will suffer if Trump raises duties

February 25, 2019 0 By autotimesnews

The plans of the US authorities to introduce 25% protective duties on imports of automotive components and cars into the country are not so harmless, according to Moody’s rating agency.

At Moody’s. warned of global problems in the economy due to the possible introduction of duties on European cars and parts, which for the second year now faces Donald Trump. All this will have a negative impact on the flow of goods of about $ 500 billion, which is 2.8% of global imports.

Recall, the US Department of Commerce on February 17 submitted to the president a report on the extent to which car imports and components in the United States threaten the country’s national security. Donald Trump, on the basis of this document, must, within 90 days, decide whether or not to introduce protective duties of 25%.

Protective duties will hit the global economy, affecting pricing, disrupting the efficiency of the industry. All of this along the chain will affect the entire global logistics industry and further slow down the global economy, which has obviously begun to slow down lately.

Automotive industry captures many areas – from manufacturers of individual components to automakers. Part of the costs will be borne by consumers, raising prices. Japanese, Korean and German auto concerns will suffer the most. Fees will also hit Mexican companies that export auto components to the USA or assembled foreign cars at their plants. China will suffer less than others, whose automakers are not so closely connected with the American market.

Well, that’s not all! Rising prices for cars will also affect the financial market, warns Moody’s: this will have a negative effect on derivative securities secured by auto loans. To support demand, sellers will have to provide preferential credit conditions, a large number of high-risk loans will be issued. It will also negatively affect the financial market and the US economy. There may be other consequences.