The impact of new tariffs on Mexican goods would hit the automotive industry and consumers hard.
“The administration is clearly trying to exert some pressure by putting these tariffs on cars,” Gregory Migliore, editor in chief of (Verizon Media-owned) Autoblog, told Yahoo Finance. “I think the impact would be very dangerous for consumers.”
President Trump is threatening a 5% tax on any goods imported from Mexico, which would go into effect on June 10. Other popular items include televisions, tequila, beer, and guacamole.
“Almost [every automaker] in some capacity either makes cars or has a supplier in Mexico,” Migliore said, adding that the effects for consumers would be “almost immediate.”
Mexico needs to show ‘sign of good faith’
Trump has been vocal about imposing tariffs on Mexico, citing the country’s “passive cooperation” in facilitating illegal immigration across the southern border. The White House in a press release cites “untold amounts of crime” for Trump’s hard line on trade with Mexico.
The president said Mexico needs to adopt stricter regulations on the border, tweeting that doing so would be “a sign of good faith.”
As a sign of good faith, Mexico should immediately stop the flow of people and drugs through their country and to our Southern Border. They can do it if they want!
— Donald J. Trump (@realDonaldTrump) June 3, 2019
A ‘very healthy time’ for auto industry
Even with the threat of tariffs, Autoblog’s Migliore said it’s a “historically great” time to make an automotive purchase.
“Car sales are still at a very healthy level, almost 17 million projected for the rest of the year,” he said. “Is it still a very good time to buy a car in a very healthy market? Absolutely. Gas prices are still very low, 10 cents lower than this time last June. Credit is readily available. It’s still a very healthy time for the car business.”
Katie is an associate editor at Yahoo Finance. Follow her on Twitter.