A proposed tariff from President Donald Trump on imported steel and aluminum imports could substantially raise costs and therefore prices of cars and trucks sold in America, according to Toyota.
Trump said Thursday he plans to order tariffs of 25 percent on imported steel and 10 percent on aluminum. He said the policy is “being written now” and will be signed next week. He promised the policy would be in effect “for a long period of time.”
“People have no idea how badly our country has been treated by other countries,” Trump said Thursday. “They’ve destroyed the steel industry, they’ve destroyed the aluminum industry, and other industries, frankly.”
“What’s been allowed to go on for decades is disgraceful. “
Toyota said 90 percent of the steel and aluminum purchased for its cars made in the United States is sourced in the country, according to Reuters. That may not prevent increased costs for Toyota and other carmakers, because those suppliers use imported material, which they process into other steel or aluminum products, Bloomberg reported.
An economist for Cox Automotive told Bloomberg the proposed tariffs would add about $200 to the total price of a vehicle. Bloomberg said an average car now includes about $830 of steel and $400 of aluminum.
“These proposed tariffs on steel and aluminum imports couldn’t come at a worse time,” Cody Lusk, president of the American International Automobile Dealers Association, told Bloomberg. “Auto sales have flattened in recent months, and manufacturers are not prepared to absorb a sharp increase in the cost to build cars and trucks in America.”
The proposition from Trump has received negative reviews, including from Republicans in the White House. House Speaker Paul Ryan’s spokesman Doug Andres said Ryan is “hoping the President will consider the unintended consequences of this idea,” according to CNN.
It wasn’t clear if America’s key trading partners — including Canada and the European Union — will be exempt from the proposed tariffs. The EU and Canada both expressed their opposition to the proposition, the New York Times reported.
The biggest steel exporters to the United States are Canada, South Korea and Mexico, while Canada, China and Russia are the biggest aluminum exporters, CNN said.
Trump’s announcement led to a dive in automobile stocks. Toyota, General Motors and and Ford all fell around 3 percent Thursday. Fiat Chrysler and Honda each fell at least 2.5 percent.
Toyota in Georgetown employs about 8,000 workers who build engines and the Camry, Avalon and some Lexus vehicles. The plant has more than 350 parts and commodities suppliers in the United States, including 100 in Kentucky, according to Toyota.