Although Donald Trump has put a break in place on the 25 percent tariffs for the next 30 days, there continues to be the threat that the could come back in effect.
One of the industries that could be adversely affected by the tariffs is the auto industry. We reached out to one of our local car dealerships, Western GM, to understand what and how these tariffs may affect us in the Drumheller area. Brad LeDrew, Sales Manager for Western GM shares he is not sure what will happen but reflects on when the tariffs were put in back in Trump’s first presidency. “They had similar tariffs on vehicles, so it was based on its origin, where they were built. If they didn’t have a certain amount of American components in them, they were subject to a tariff. I can understand that they are trying to bring manufacturing into the US. A lot of people may not realize that for 60 plus years, North American manufacturing is very integrated. We’ve got a wealth of nickel and aluminum in Canada, and you can’t make high tensile steel without nickel. You can’t make aluminum without aluminum. When you look at us (GM), Ford, or Honda in Ontario, we have a lot of facilities that takes those raw materials into parts, or an engine block, then they go into the US, assembled, put into a vehicle, and then comes back to Canada as a fully assembled vehicle. From what I have listened to on the news, it doesn’t make any sense to put these tariffs on automotive vehicles.”
If these tariffs do come into effect in 30 days, the prices of new vehicles that are already on the dealership lot should not be affected admits LeDrew. “When GM invoices us, we now own those vehicles. We own every vehicle on our lot. So if GM says there is going to be a price increase on a vehicle, it doesn’t affect those on our lot because we already bought it at the lower price and we already own it.”
Many people may want to order a vehicle with specific features directly from the plant, LeDrew shares that in the past the company protected the price. “We have a lot of farmers that factory order from us, through Ashley and Mike, and GM in the past has always done price protection. So you put in a factory order today, at today’s price, GM in the past has always honoured that price, despite an increase in price. I would hope that GM will continue to do that.”
Only time will tell on what will happen with vehicle prices if and when the tariffs come into play. To discuss further, if you are looking at purchasing a new vehicle, stop by or reach out to the team at Western GM in Drumheller.
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