Higher Import/Export Taxes Could Reduce American Supply of Luxury Vehicles

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President Trump threatened to raise tariffs on cars from the European Union by 20 percent. As a wealthy man who enjoys driving luxury German cars, Trump will still be able to afford imports. The average American, however, might think twice about buying that new Mercedes roadster. Higher tariffs will mean most likely mean higher prices to cover those tariffs.

How the Tariff Will Affect European Businesses

E.U. car manufacturers depend on American buyers as significant portion of their market. Many are now considering how they might partner with one another to share costs. Others are seeking ways to design less expensive cars.

Luxury convertibles, in particular, are expensive to build. As a result, Americans might see fewer of them on the road as long as the high tariffs last. Carmakers will take a hit if Americans opt not to pay higher prices for convertibles. Top-down models do not sell well in Asia due to the heat and pollution. Europeans and Americans are the only viable market for such cars.