Car prices could skyrocket after threat of tariffs on Mexico


AUSTIN (KXAN) — The Trump administration wants critics of a proposed tariff on Mexican goods to shift their frustrations to Congress.

There’s concern about the economic ramifications, especially here in Texas.

The President suggests a five percent tariff on all imports from Mexico beginning June 10. The tariffs will increase five percent each month up to a permanent level of 25 percent on October 1. He wants Mexico do something about the flood of migrants coming to the U.S. through the Southwestern border.

Impact on the auto industry

One of the biggest businesses that will be hit is the auto industry.

A number of manufacturers assemble their cars at Mexican factories. But there’s a slightly different reaction from Texas truck dealers and those who may buy one.

“Summer is kind of buying season,” said Mitchell Beaty, the sales director at Nyle Maxwell GMC in Round Rock.

It’s the final day of the month, so for car dealers, it’s time to make quota.

“We’re three units away from our goal,” Beaty said on Friday.

At Nyle Maxwell GMC, they’re pushing trucks off the lot. Buyers are just in time. In a little over a week, these cars may be a bit more pricey.

“Whether it’s the tariffs or technology, prices are going up, the cars aren’t getting any cheaper.” 

The U.S. imported nearly $350 billion in goods from Mexico last year. $93 billion in vehicles.

Industry experts say if the Trump Administration enforces a 25 percent tariff as planned, that will raise the price of US cars sold to consumers by an average of $1,300.

Esther Min, who was visiting Austin from Dallas, said she was closely eyeing the price tag of her recent car purchase two years ago.

“I try to keep my budget. Especially because I want to buy a house and pay off debt,” Min said. “I didn’t want to go over what I could spend monthly, so I wanted to make a wise decision.”

But dealers are optimistic.

Even if tariffs cause a price jump, they say consumers will continue to confidently buy.

“As long as we continue to listen to customers, and help them in creating that experience, people are going to come back and try to find a way. People are going to continue life as usual,” Beaty said.

Texas imports

When it comes to imports from Mexico, Texas has one of the higher percentages. In fact, the state Comptroller’s offices told KXAN that trade with Mexico represents approximately 40 percent of trade volume in Texas.

A statement from the governor

Governor Greg Abbott released this statement regarding the Mexico tariffs:

The crisis at our southern border is at a breaking point. I share the President’s deep frustration with Congress’ inaction to step up and fix this problem. This crisis is worsening by the day, and Texas is being left to deal with the consequences. Congress’ refusal to address the crisis is unacceptable. I’ve previously stated my opposition to tariffs due to the harm it would inflict on the Texas economy, and I remain opposed today. Nevertheless, the President is trying to address this emergency. Now, Congress must do its job and start passing laws to fix our broken immigration system.

A message from the President of Mexico:

Mexico’s President says this isn’t the way to solve social problems. It could affect the future of a new trade agreement between the U.S, Canada and Mexico. 

Mexico’s foreign minister expects to meet with American officials soon.

Copyright 2020 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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