The Reason Why Tariffs On Imported Car Parts Will Increase Auto Thefts

Car prices aren't the only numbers that will probably increase for the worst.

If the US government gets its way regarding a 25 percent tariff on imported auto parts from Europe, then consumers will need to be prepared to pay extra for things other than cars themselves. According to Reuters, basic repairs, insurance premiums, and increased risk of theft would also likely increase as a result of tariffs. Is this something the Trump administration has taken into account? Who knows, but auto industry groups are already sounding the alarm bells and we should all pay attention.

For example, tariffs on imported auto parts could increase auto insurance premiums by 2.7 percent, or $3.4 billion annually. How come? The American Insurance Association and other insurance groups claim “The imposition of tariffs could likely lead to the filing of hundreds, if not thousands, of requests for rate increases by insurers with insurance regulators across all fifty states.”

Moreover, it may be more difficult for insurers to find suitable replacements parts for policyholders, resulting in further delays and additional costs. But what do tariffs and car thefts have in common? “Motor vehicle theft rates could rise, as many stolen vehicles are sold for their parts,” the groups added.

Fortunately, the Trump Administration has not enacted this threat of 25 percent tariffs just yet since the Commerce Department states it is still “collecting all the facts, and completing a careful analysis. While we aim to complete the investigation and report to the President within a couple months, no proposal for action has yet been made.”

Meanwhile, the Auto Care Association, which represents 150,000 manufactures, distributors, and auto parts sellers, estimates the cost of car ownership could increase by over $700 per year per household if tariffs are imposed. “The costs of maintaining a car is going to go up as is fixing or insuring it,” said Kristin Dziczek, an economist who spoke to Reuters. “But those costs are not going to go up as much as buying a new car” with added tariff costs.

BMW To Build More SUVs In China Because Of Tariffs?

A decision will come very soon.

Ever since the trade war and resulting tariffs between the US and China began several months ago, automakers had to react in order to protect their business interests. BMW is no exception. Although its Spartanburg, South Carolina production plant, home to the X3, X4, X5, X6, and X7, has been a huge success story, the trade conflict between America and China could have a negative impact.

According to Reuters, BMW is only a few weeks away from making a decision regarding building more SUVs in China in order to minimize the damage of lost revenue. Those tariffs are expected to hurt the German automaker’s 2018 earnings by around $344 million.

The most obvious solution to fixing that for 2019 would be to increase SUV production, specifically the X3, in China to avoid those tariffs entirely. “We will take a final decision in the coming weeks about which model to localize next in China,” Chief Financial Officer Nicolas Peter said.

In fact, Peter also noted that X3 sales have actually increased ever since BMW began producing it in Asia as well. It no longer needs to rely so much on export from the US. Would BMW’s decision to shift more X3 production from the US to China hurt American jobs? Unknown. But again, BMW needs to look out for its greater interests and all the more so when it involves one of its best-selling models.

If it costs some jobs at one factory then so be it. “If the tariffs undermine the competitiveness of BMW production and sales in the US, the result could be strongly reduced export volumes with negative effects on investments and jobs in the US,” according to BMW spokesman Kenn Sparks. The X3 is not the only volume seller that could see a partial production shift to China; the X5 is also a candidate.

Earlier this year BMW stopped exporting the X3 from the US to China, so this whole tariff war thing is very real. Just last month, BMW announced it was spending $4.2 billion to take full control of its main joint venture in China, a clear-cut sign the automaker will soon become less reliant on Spartanburg.

In 2017, Spartanburg built over 370,000 SUVs and more than 270,000 of those were exported to China and other overseas markets. Spartanburg should be okay in the immediate future thanks to increased US demand for SUVs and the all-new X7, of which it will be the sole producer. Nevertheless, Spartanburg’s star status has just taken a hit.

Was BMW’s Decision To Build A New Euro Production Facility A Reaction To Tariffs?

In this day and age, perhaps.

Terms like “free trade” and “tariffs” have been in the news a lot lately and for good reason. As a consequence of the United States slapping tariffs on many of its long-time trading partners from Europe as well as Mexico and Canada (not to mention China), corporations across the world need to protect their own interests. BMW, for example, has just announced plans to open a new $1.2 billion production plant in Hungary, its first new facility since 2000. Bloomberg reports that this plant, once operational, will produce 150,000 vehicles a year.

But what does this new facility have to do with tariffs and trade? BMW is making sure its operations are secured in Europe, thus enabling it greater future flexibility when it comes to exports. By comparison, BMW’s Spartanburg, South Carolina facility produces over 400,000 vehicles annually, so this new Hungarian plant is not a replacement (at least not yet). Spartanburg is where BMW builds its hot-selling SUVs, specifically the X4, X5, and X6.

Only the other day we reported that BMW has been forced to increases the X5 and X6's price tags in China due to newly imposed tariffs. But say if those same vehicles were, one day, built at the new Hungarian plant? Assuming the EU and China are not in the midst of a trade war, then those price increases wouldn’t be necessary.

This does not mean Spartanburg is shutting down, let alone slowing production volumes. However, it is a clear sign BMW wants to further cement its position in Europe and, by extension, other markets as well. Other major automakers, such as Audi and Mercedes-Benz, also have production facilities in Hungary. “We are now strengthening our activities in Europe to maintain a worldwide balance of production between Asia, America and our home continent,” BMW CEO Harald Krueger said in the statement.

China Lowers Trade Tariffs On Foreign Vehicles And Auto Parts

Donald Trump must be ecstatic.

The United States and China have been slowly creeping towards a trade war, which has effected the cost and availability of automobiles. Not only has China imposed a 25% tariff on foreign cars, it has also held several cars at port. The 25% tariff has effected GM, which produces the CT6 hybrid in China. The high tariffs have also greatly impacted European automakers, although the issue is about to improve. According to Reuter's Adam Jourdan, China will cut its tariffs to allow for greater access to its enormous automotive market.

Starting on July 1, 2018, the tariff will be cut from 25% to 15% for most vehicles. The Chinese Ministry of Finance said in a statement that the move is to spur development in the local auto sector. Initially, the move will mainly help premium brands such as Audi, BMW, Mercedes-Benz, and Tesla. BMW said this is a "strong signal that China will continue to open up," and Audi said it was looking forward to "further liberalization and opening" of the Chinese market. A Nissan executive also added that the "Benefits are huge for our business, especially Infiniti." The German cars will be the biggest beneficiaries, due to the sheer number of cars they sell.

The reduced tariffs will help foreign automakers compete with local Chinese automakers on price. Toyota said it would reduce prices on cars that benefited from lower tariffs in order to be more competitive. China will also reduce the tariff on auto parts from 10% down to 6%. Donald Trump has been opposed to trade tariffs with China, so this news should make him very happy. US trade talks with China will continue, with working plans to eliminate China's long-standing rules on foreign ownership of businesses.

Was BMW’s Decision To Build A New Euro Production Facility A Reaction To Tariffs?

In this day and age, perhaps.

Terms like “free trade” and “tariffs” have been in the news a lot lately and for good reason. As a consequence of the United States slapping tariffs on many of its long-time trading partners from Europe as well as Mexico and Canada (not to mention China), corporations across the world need to protect their own interests. BMW, for example, has just announced plans to open a new $1.2 billion production plant in Hungary, its first new facility since 2000. Bloomberg reports that this plant, once operational, will produce 150,000 vehicles a year.

But what does this new facility have to do with tariffs and trade? BMW is making sure its operations are secured in Europe, thus enabling it greater future flexibility when it comes to exports. By comparison, BMW’s Spartanburg, South Carolina facility produces over 400,000 vehicles annually, so this new Hungarian plant is not a replacement (at least not yet). Spartanburg is where BMW builds its hot-selling SUVs, specifically the X4, X5, and X6.

Only the other day we reported that BMW has been forced to increases the X5 and X6's price tags in China due to newly imposed tariffs. But say if those same vehicles were, one day, built at the new Hungarian plant? Assuming the EU and China are not in the midst of a trade war, then those price increases wouldn’t be necessary.

This does not mean Spartanburg is shutting down, let alone slowing production volumes. However, it is a clear sign BMW wants to further cement its position in Europe and, by extension, other markets as well. Other major automakers, such as Audi and Mercedes-Benz, also have production facilities in Hungary. “We are now strengthening our activities in Europe to maintain a worldwide balance of production between Asia, America and our home continent,” BMW CEO Harald Krueger said in the statement.

BMW To Build More SUVs In China Because Of Tariffs?

A decision will come very soon.

Ever since the trade war and resulting tariffs between the US and China began several months ago, automakers had to react in order to protect their business interests. BMW is no exception. Although its Spartanburg, South Carolina production plant, home to the X3, X4, X5, X6, and X7, has been a huge success story, the trade conflict between America and China could have a negative impact.

According to Reuters, BMW is only a few weeks away from making a decision regarding building more SUVs in China in order to minimize the damage of lost revenue. Those tariffs are expected to hurt the German automaker’s 2018 earnings by around $344 million.

The most obvious solution to fixing that for 2019 would be to increase SUV production, specifically the X3, in China to avoid those tariffs entirely. “We will take a final decision in the coming weeks about which model to localize next in China,” Chief Financial Officer Nicolas Peter said.

In fact, Peter also noted that X3 sales have actually increased ever since BMW began producing it in Asia as well. It no longer needs to rely so much on export from the US. Would BMW’s decision to shift more X3 production from the US to China hurt American jobs? Unknown. But again, BMW needs to look out for its greater interests and all the more so when it involves one of its best-selling models.

If it costs some jobs at one factory then so be it. “If the tariffs undermine the competitiveness of BMW production and sales in the US, the result could be strongly reduced export volumes with negative effects on investments and jobs in the US,” according to BMW spokesman Kenn Sparks. The X3 is not the only volume seller that could see a partial production shift to China; the X5 is also a candidate.

Earlier this year BMW stopped exporting the X3 from the US to China, so this whole tariff war thing is very real. Just last month, BMW announced it was spending $4.2 billion to take full control of its main joint venture in China, a clear-cut sign the automaker will soon become less reliant on Spartanburg.

In 2017, Spartanburg built over 370,000 SUVs and more than 270,000 of those were exported to China and other overseas markets. Spartanburg should be okay in the immediate future thanks to increased US demand for SUVs and the all-new X7, of which it will be the sole producer. Nevertheless, Spartanburg’s star status has just taken a hit.

BMW To Build More SUVs In China Because Of Tariffs?

A decision will come very soon.

Ever since the trade war and resulting tariffs between the US and China began several months ago, automakers had to react in order to protect their business interests. BMW is no exception. Although its Spartanburg, South Carolina production plant, home to the X3, X4, X5, X6, and X7, has been a huge success story, the trade conflict between America and China could have a negative impact.

According to Reuters, BMW is only a few weeks away from making a decision regarding building more SUVs in China in order to minimize the damage of lost revenue. Those tariffs are expected to hurt the German automaker’s 2018 earnings by around $344 million.

The most obvious solution to fixing that for 2019 would be to increase SUV production, specifically the X3, in China to avoid those tariffs entirely. “We will take a final decision in the coming weeks about which model to localize next in China,” Chief Financial Officer Nicolas Peter said.

In fact, Peter also noted that X3 sales have actually increased ever since BMW began producing it in Asia as well. It no longer needs to rely so much on export from the US. Would BMW’s decision to shift more X3 production from the US to China hurt American jobs? Unknown. But again, BMW needs to look out for its greater interests and all the more so when it involves one of its best-selling models.

If it costs some jobs at one factory then so be it. “If the tariffs undermine the competitiveness of BMW production and sales in the US, the result could be strongly reduced export volumes with negative effects on investments and jobs in the US,” according to BMW spokesman Kenn Sparks. The X3 is not the only volume seller that could see a partial production shift to China; the X5 is also a candidate.

Earlier this year BMW stopped exporting the X3 from the US to China, so this whole tariff war thing is very real. Just last month, BMW announced it was spending $4.2 billion to take full control of its main joint venture in China, a clear-cut sign the automaker will soon become less reliant on Spartanburg.

In 2017, Spartanburg built over 370,000 SUVs and more than 270,000 of those were exported to China and other overseas markets. Spartanburg should be okay in the immediate future thanks to increased US demand for SUVs and the all-new X7, of which it will be the sole producer. Nevertheless, Spartanburg’s star status has just taken a hit.

Was BMW’s Decision To Build A New Euro Production Facility A Reaction To Tariffs?

In this day and age, perhaps.

Terms like “free trade” and “tariffs” have been in the news a lot lately and for good reason. As a consequence of the United States slapping tariffs on many of its long-time trading partners from Europe as well as Mexico and Canada (not to mention China), corporations across the world need to protect their own interests. BMW, for example, has just announced plans to open a new $1.2 billion production plant in Hungary, its first new facility since 2000. Bloomberg reports that this plant, once operational, will produce 150,000 vehicles a year.

But what does this new facility have to do with tariffs and trade? BMW is making sure its operations are secured in Europe, thus enabling it greater future flexibility when it comes to exports. By comparison, BMW’s Spartanburg, South Carolina facility produces over 400,000 vehicles annually, so this new Hungarian plant is not a replacement (at least not yet). Spartanburg is where BMW builds its hot-selling SUVs, specifically the X4, X5, and X6.

Only the other day we reported that BMW has been forced to increases the X5 and X6's price tags in China due to newly imposed tariffs. But say if those same vehicles were, one day, built at the new Hungarian plant? Assuming the EU and China are not in the midst of a trade war, then those price increases wouldn’t be necessary.

This does not mean Spartanburg is shutting down, let alone slowing production volumes. However, it is a clear sign BMW wants to further cement its position in Europe and, by extension, other markets as well. Other major automakers, such as Audi and Mercedes-Benz, also have production facilities in Hungary. “We are now strengthening our activities in Europe to maintain a worldwide balance of production between Asia, America and our home continent,” BMW CEO Harald Krueger said in the statement.

Will BMW Slash US Factory Jobs Because Of Trump-Imposed Tariffs?

But wait, aren't the tariffs on imports only? Yes, but...

According to Reuters, BMW has warned that it may be forced to reduce investment and slash its workforce at its Spartanburg, South Carolina, production facility if President Trump succeeds in imposing a 20 percent tariff on all imported EU-built vehicles. This production plant also happens to be BMW’s largest in the world and ships more than 70 percent of its annual production output to other countries. But how can US tariffs on imports affect Spartanburg?

Because other countries, such as China, have threatened to retaliate against US imposed tariffs on their goods with tariffs of their own. Because China is one of Spartanburg’s biggest destination markets, the cost of exporting those new BMWs will increase. To make up for the expected profit loss, BMW claims it could impose a production crackdown and even layoffs. And there’s more: higher tariffs on imported components that Spartanburg needs to build BMWs such as the X4, X5, X6, and upcoming X7, will in turn make other production facilities outside of the US more competitive.

“All of these factors would substantially increase the costs of exporting passenger cars to these markets from the United States and deteriorate the market access for BMW in these jurisdictions, potentially leading to strongly reduced export volumes and negative effects on investment and employment in the United States,” BMW said in a letter to U.S. Secretary of Commerce Wilbur Ross. Perhaps BMW stated the overall situation the best: “By insulating the United States from foreign competition, there is less incentive for American companies to strive to raise their productivity and look for ways and means of producing ever better goods (and services) ever more cheaply.”

BMW To Build More SUVs In China Because Of Tariffs?

A decision will come very soon.

Ever since the trade war and resulting tariffs between the US and China began several months ago, automakers had to react in order to protect their business interests. BMW is no exception. Although its Spartanburg, South Carolina production plant, home to the X3, X4, X5, X6, and X7, has been a huge success story, the trade conflict between America and China could have a negative impact.

According to Reuters, BMW is only a few weeks away from making a decision regarding building more SUVs in China in order to minimize the damage of lost revenue. Those tariffs are expected to hurt the German automaker’s 2018 earnings by around $344 million.

The most obvious solution to fixing that for 2019 would be to increase SUV production, specifically the X3, in China to avoid those tariffs entirely. “We will take a final decision in the coming weeks about which model to localize next in China,” Chief Financial Officer Nicolas Peter said.

In fact, Peter also noted that X3 sales have actually increased ever since BMW began producing it in Asia as well. It no longer needs to rely so much on export from the US. Would BMW’s decision to shift more X3 production from the US to China hurt American jobs? Unknown. But again, BMW needs to look out for its greater interests and all the more so when it involves one of its best-selling models.

If it costs some jobs at one factory then so be it. “If the tariffs undermine the competitiveness of BMW production and sales in the US, the result could be strongly reduced export volumes with negative effects on investments and jobs in the US,” according to BMW spokesman Kenn Sparks. The X3 is not the only volume seller that could see a partial production shift to China; the X5 is also a candidate.

Earlier this year BMW stopped exporting the X3 from the US to China, so this whole tariff war thing is very real. Just last month, BMW announced it was spending $4.2 billion to take full control of its main joint venture in China, a clear-cut sign the automaker will soon become less reliant on Spartanburg.

In 2017, Spartanburg built over 370,000 SUVs and more than 270,000 of those were exported to China and other overseas markets. Spartanburg should be okay in the immediate future thanks to increased US demand for SUVs and the all-new X7, of which it will be the sole producer. Nevertheless, Spartanburg’s star status has just taken a hit.

The European Union May Be Safe From Automotive Tariffs

We hope this news turns out to be true.

President Trump has been pushing for a 25% tax on foreign steel and aluminum, which would greatly impact the automotive industry. The tariffs could deliver a massive blow to foreign automakers, particularly German automakers, who control 90% of the luxury market in the US. So far, President Trump has been firm in his resolve, but an Automotive News report indicates that the European Union may be spared from the looming tariffs.

The US ambassador to Germany reportedly reached out to executives from Daimler, Volkswagen and BMW to inform them that Trump may be willing to abandon the tariffs on the EU. Trump would drop the tariffs if the EU was willing to make a deal, and annul its foreign duties on US-built cars. The German Association of the Automotive Industry said "it is clear that the negotiations are exclusively being held at a political level," which is a positive sign. Trump's tactics have sparked fears of a global trade war, but this news gives us hope that concessions can be made, at least with the EU.

These negotiations will have a massive impact on the automotive industry, as German automakers try to convince Trump that tariffs could cause damage to global free trade. It seems as though the EU could solve everything by just caving into Trump's demands, but the EU is not allowed under global rules to decrease its 10% tariff on American cars without a bilateral accord with the US or an agreement with the World Trade Organization as a whole. Although the EU seemingly has a way out of these tariffs, it may not result in the deal Trump has been seeking.