Some car audio and electronics companies, are now making contingency plans in the event that President Trump’s plans to place a 20 percent border tax on foreign goods entering the US comes to pass, we are told.
There were many media reports last week on how such a tax would cause a hike in car prices. It would also likely cause an increase in car audio prices, or at least on prices of higher end car audio items. We’ll get back to that in a minute.
Regarding cars, the tax would cause auto prices to “soar out of range,” for many buyers, said Automotive News, and would likely cause consumers to hold onto cars longer.
A 20 percent tax would cause GM to raise its price on average by $995 per vehicle, Toyota by $2,651, Subaru by $3,656 and Volkswagen by $6,779, according to a report by Baum & Associates. (It varies by whether the cars or its parts are produced overseas). Ford, with more production in the US, would be less affected with an average price hike of only $282 per vehicle but Volvo, would be one of the most heavily impacted, with an average increase in price per car of $7,643.
The average Honda would jump $1,312 in price, Chrysler, $1,672, Nissan $2,298, BMW, $3,725, Hyundai/Kia, $2,704 and Mercedes, $4,211.
A new car could become a luxury affordable only to the top wage earners, said NADA, the National Automobile Dealers Association.
For car audio, a border tax (called a border adjustment) would cause a spike in some products.
One industry executive said it may be likely that only higher priced goods will be impacted, and that companies will keep low end products at current prices to attract buyers but make up the margin shortfall at the higher end.
As everyone knows, car audio margins are already stressed to the limit, so any additional costs would likely result in a price increase.
Also, all foreign imports would be taxed and so consumers will find themselves paying higher prices for many every day items. This may stress their budgets for elective purchases like car audio. Then again, if consumers keep cars longer, they will want to upgrade their electronics.
Meanwhile, the National Retail Federation is claiming that a proposed $1 trillion border tax would cause a major rise in prices and cost Americans jobs.
Photo via NRF showing President Trump meeting with CEOs of leading retailers at the White House last week.