Donald Trump’s freewheeling 2024 presidential campaign, despite its eccentricities, had a number of solid through lines that did not waver throughout the year, such as his insistence on deregulation, deportations and tariffs, tariffs, tariffs.
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Tariffs are taxes placed upon goods imported into the U.S. from foreign countries, and Trump levied several upon other countries during his first administration. Moreover, he has promised to do so again upon his return to the White House in 2025. One such product he intends to place severe levies on? Foreign cars.
It’s this threat of tariffs that caused stock prices of foreign automakers to plummet on the morning after Trump’s win, as reported by CNBC. Chinese, German and Japanese automakers all saw sharp drops in their stocks as shareholders braced for a massive decrease in foreign auto sales in America in the coming years. Why? Because tariffs increase prices.
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As many critics of Trump’s tariff policies have noted (and as happened during his first administration), when foreign manufacturers have tariffs placed upon them, they make up the financial difference by increasing the prices of their products. This means that if foreign automakers have to pay higher tariff taxes for importing their cars to America, they’ll increase the prices of those cars, placing the financial burden on of the tariffs onto American consumers.
This may cause some to wonder why Trump would implement tariffs in the first place. The president-elect believes that this policy would increase the sale of American cars, as well as force automakers to move their factories to America, which would provide a boost to manufacturing employment.
Whether or not that actually occurs remains to be seen. However, it is almost certain that, in the short term, with these tariffs foreign cars are likely to become more expensive.
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This article originally appeared on GOBankingRates.com: Trump Won the Election: The Major Change That Could Be Coming to the Price of Foreign Cars
