Tariffs & Their Effects On The Auto Industry

🏦 The Tariff Situation

Earlier this week, President Trump made huge tariff announcements that will be discussed in next week’s newsletter. The reason I am not reporting on this specific Tariff announcement to you right now is because there are lots of global implications and I would like time to research it thoroughly. I hope you still enjoy this article!

📆This Week’s Topic

As you may have seen by now, I like talking about tariffs on Friday Finance, and I have talked a lot about when tariffs are happening, what the economic effects of tariffs are, and what the possible future of tariffs could be. Today, I want to discuss auto tariffs. I also want to continue discussing the potential economic effects of tariffs shortly.

📔 Why This Topic?

I have discussed tariffs before on Friday Finance. I introduced them in the article “Why Tariffs Will Destroy The US Economy” and detailed Canada’s response to the tariffs in “Tariff Update: Updated Rates & Canada’s Response”. Now, I would like to talk about the possible effects on the auto economy. Tariffs put a tax on imports and exports. President Trump has imposed a 25% tariff on Canadian & Mexican goods, while he imposed a 20% tariff on Chinese goods.

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💳 Cause & Effect

The manufacturers of these products will raise their prices to account for these tariff taxes. This will cause major inflation as these products will be raised. These products are already pretty expensive, and they would be unaffordable for a lot of people. Two of the major goods produced in Canada are automobiles and gas. Gas prices are already crazy expensive; to raise them even more would cause a lot of destruction.

📊 Statistics

Cars are considered a luxury good in the American economy, as the average car price is over $48,000. Since cars are one of the main goods in Canada, these prices will increase. Some car companies may close down because they are losing money from the tariffs. They will also try to offset prices as much as they can so that they can lead with low prices.

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🔚 Outcome

Another thing that could happen in the coming weeks is a mass layoff in the auto economy. A lot of employees for massive car companies will be laid off because they will try their best to do without them. This may not be as much as the mass layoff for government workers, but it will still be a huge problem. This is predicted to increase the unemployment rate in the US.

⛱ Consumer Effect

Many young people are deciding to buy cars as soon as possible, as car prices are expected to increase drastically. Many people will not be able to buy cars, as cars are very expensive products. With a 25% increase, this could involve prices skyrocketing. The word is spreading that car prices will increase. A lot of people are rushing to buy cars, which is making existing cars increase in value.

🏢Business Effect

Certain car dealerships may raise prices prematurely as people are more willing to pay more because the prices are going to be even higher because of the tariff increase. This means that if you would like to sell your car, you should keep it because once the tariff increase for Canada gets reflected in the car’s prices, you should be able to sell it for a lot more than you bought it for.

⏳ Final Snippet

Investors & Analysts expect that as an overall average for the car market, most vehicles’ prices and values could potentially increase by $10,000 in the next few months. This will make cars a lot more of a luxury good, even though in most cases, cars decrease in value because they get worn down. If you have a car that is 4-6 years old, in a couple of years, you could sell it for an additional $10,000 to the price you would be able to sell it for now.

🙏Thank You & Important Information

Anyway, that is it for this week. Thank you to my subscribers and readers for reading this edition of Friday Finance. Also, if you are enjoying our Friday Finance shirts, you can make your clothing with the same printing company at https://www.printful.com/a/fridayfinance. You can read other tariff articles or our full archive if you enjoyed this article. Check out our archive by clicking the button. Have a great week, and I will see you next week.