Mazda, Mexico to be hit by US auto tariffs

Bloomberg

Automakers including Mazda Motor Corp. and countries led by Mexico should buckle up: their car businesses could be in for a bumpy ride, thanks to US President Donald Trump.
Trump instructed his Commerce Secretary Wilbur Ross to consider conducting an investigation into whether auto imports are weakening the American economy and may impair national security. The Commerce Department said shortly after the White House’s statement that it’s beginning the probe.
Mexico — by far the largest source of US auto imports — would be most affected if the Trump administration implements any protectionist measures, which could include tariffs the president has floated for months. Canada, Japan, Germany and South Korea would be the next most affected.
Among the world’s carmakers, Mazda, Tata Motors Ltd.’s Jaguar Land Rover unit and Mitsubishi Motors Corp. would be hit hard. All vehicles that the companies sell in the US are imported. About 22 billion euros ($25.8 billion) of sales from European auto producers could be affected by higher US tariffs, according to estimates from Bloomberg Intelligence analyst Michael Dean. Volkswagen AG is most at risk through its production sites in Mexico and due to imports of Porsche and Audi vehicles from Europe.
Volkswagen and BMW ship a majority of the cars and trucks from abroad that they deliver to American consumers. Ford Motor Co., Honda Motor Co., and General Motors Co., on the other hand, produce substantial majorities of the vehicles they sell in the US at domestic factories. Tesla Inc. would be completely unaffected, since the electric-car maker builds all of its models in California.
Mexico has become a major manufacturing base for most global car brands, including US ones, as assembly-line workers there earn about one-10th of what their US counterparts make. Trump has blamed low-cost Mexican production for the outsourcing of US manufacturing jobs south of the border.
Trump’s probe request was met with immediate criticism from industry groups that represent both manufacturers and auto dealers, which said protectionist measures would hurt consumers by limiting car supply and making them costlier.
“To our knowledge, no one is asking for this protection,” said John Bozzella, president of the trade group Global Automakers, whose members include Honda, Nissan Motor Co. and Hyundai Motor Co. “This path leads inevitably to fewer choices and higher prices for cars and trucks in America.”
Mazda will continue to pay close attention to tariff policies in the markets it operates in, outgoing Chief Executive Officer Masamichi Kogai said in Tokyo. The biggest reason for building a plant in the US would be to strengthen the company’s brand, he said.