In what it described as a “thought exercise” on the implications of a proposed import tax in the US, Michigan auto industry analysis firm Baum & Associates crunched the numbers for major global automakers and found that, on average, the tax would increase the prices of Ford Motor Company products by just $282 in the United States.
Tesla Motors, which builds all of its vehicles in California, is the only automaker that would be more unaffected. Vehicles from Jaguar Land Rover, formerly part of Ford’s Premier Automotive Group, now imports 100% of its US-market vehicles. It would likely have to raise prices by more than $17,000 per vehicle.
Baum & Associates’ recent study takes into account both the cost of importing finished vehicles, and the cost of importing parts for US-built automobiles. The report’s findings pertaining to Ford Motor Company validate something Ford CFO Bob Shanks said last month about US President Donald Trump’s proposed 20% tariff on Mexican-built goods: that US import taxes “could have an adverse impact [for our competitors]… [but] for us it looks pretty attractive actually, not having too much impact at all over the next several years in terms of our cash taxes.”
Ford produces more vehicles in the US than any other automaker, building 82 percent of its US-market vehicles domestically.
The chances that an import tax like that proposed will pass in the US remain slim. Automotive News reports that in a separate report, UBS Securities analyst Colin Langan estimated the proposed border tax could lead to an average price increase of about 8% for US-market vehicles – $2,500 per vehicle. That, in turn, could make annual vehicle sales drop by about 2 million units across the country. He suspects the border tax could pass the US House of Representatives, but be denied by the Senate.
(Source: Automotive News)