Commentary: The Tariffs Are Here…

To say that things are going to get interesting in the next four years might be an understatement.

Before you assume where this commentary is going, let me make one thing clear. I try to keep this website free of political bullcrap (thanks, Coach Prime – Deion Sanders – for gifting us with this cleaner word), the issue I am about to dive into is something that pertains to the primary subject matter of this outlet. 

So, tariffs. Yeah, this one is going to hurt.

The recently installed President of the USA stated at the World Economic Forum last month that he will impose tariffs on imports coming into this country. In previous statements he made, that tariff for Canada and Mexico is set for 25%. Chinese imports are also taxed at 10%.

In retaliation, Canada also imposed a 25% tariff on American goods worth C$155 billion. Mexico also followed suit with their 25% tariff against imports from the USA. However, the administration did pause their tariffs on Canada and Mexico for a month until March of 2025.

How does tariffs work? By definition, Merriam-Webster states that it is “a schedule of duties imposed by a government on imported or in some countries exported goods.” If a company sends exports into another country, there is an added duty to be paid by the importer. That extra cost will be passed onto the consumer with added profit attached to the final price of goods. 

What makes this a contentious issue is that the current administration wants to impose tariffs on every country. That includes our neighbors in Canada and Mexico. For years, the three nations enjoyed free trade that support many industries – including the production of automobiles. The imposition of tariffs upon our neighbors may have already thrown out the trade agreement, known as the United States-Mexico-Canada Agreement. 

This does not bode well for American consumers. 

The way this tariff was proposed does not target specific industries, but all consumer goods and the parts that help create them. This probably included oil and food coming from Canada and Mexico. 

Where this gets complicated is how it will affect the automotive industry itself. If a vehicle has its final assembly at a plant inside this country, it may take on components imported across one of the borders. We could be talking about a gear or a completely assembled engine. Those components could be subject to tariffs that could add to the cost of the finished consumer product.

CBC News anchor Andrew Chang recently broadcasted a segment explaining how this will affect both the USA and Canadian economies. The takeaway from that report points to a rise in inflation and a drop in Gross National Product in both of our countries. Both economic indicators are critical to ensuring the fiscal health of a nation. 

Since 2020, our economy has already been challenged due to the effects of the COVID-19 Pandemic. The loss of inventory of many items caused their prices to rise. Those included automobiles. The lack of components to build finished vehicles held inventory back causing a drop in sales. 

Adding tariffs to the price of automobiles will have both a short and long term effect on the economy and a lot of bottom lines across the industry. This is an industry that has carried the nation’s economy on its back for decades. 

There are other things to consider. If you are asking the automotive industry to bring manufacturing back inside this country, you have to measure how much that will cost. It could cost more to build a new facility and hire workers, then get it running to produce a 100% American made automobile. Honestly, I doubt that could be achieved by the time the next Presidential Election will take place without cutting corners and doing it correctly.

Understand that the original target of these tariffs was China. The fact is that less expensive electric vehicles flooding our market from BYD and other automakers have not materialized at this point. This led to a mass of fear mongering. The USA is not alone screaming these discords. It is that we exacerbate these fears and wrap them up as protectionist economic policies. And, yet, here we are.

That is exactly what’s happening here. Fear mongering and saber rattling towards pretty nasty trade war – multiple trade wars, at that. That’s a bunch of shoes not a lot of people want to drop.                     

Before we factor in battery-electric vehicles, these tariffs cover every vehicle sold in the USA. Those sweet lease deals you’re seeing now on the Chevrolet Equinox EV are not going to last. Let me not get into what this administration has in mind regrading Federal Tax Credits on EVs, due to their elimination of mandates EV production and sales in the near future. 

Can we think clearly for a moment? Do you want to pay more for a pickup truck that has already seen sticker prices rise at an extraordinary rate since the late 2010s? Can you stomach a massive loan payment for the privilege of owning the latest and greatest thing on the road?

Simply put, that’s how tariffs will play into your wallet and bank account. 

These tariffs are now in effect. It shouldn’t have to be like this. 

All photos by Randy Stern