Car prices may rise on US bully-boy trade tactics 

Car prices may rise on US bully-boy trade tactics 

LUXURY car sales may have been booming lately, but that might all be about to change in light of US President Donald Trump’s tit-for-tat tariff stoush with China and Canada. Australia has stayed out of the cross hairs in this latest escalation of trade measures. But not all of us Down Under will remain entirely in the clear, especially if we’re into luxury cars.

Car marques are anticipating substantial rising costs as a result of the tariffs and not all of those costs will be absorbed by manufacturers. Some will inevitably be passed on to consumers, perhaps even as far away as Australia.

Equities have dropped off in the US, Europe and Asia as investor nerves have climbed on fears of an all-out trade war between the US and China. Trump’s latest threat to slap European cars with a 20 per cent import duty didn’t help matters. His warning followed the imposition of retaliatory tariffs by the EU - that move prompted by a US decision to put tariffs on steel and aluminium imports without exempting allies such as the EU, Canada and Mexico. Australia escaped the 25 per cent steel and 10 per cent aluminium tariffs after intense lobbying of the White House by a delegation led by Prime Minister Malcolm Turnbull and Foreign Affairs Minister Julie Bishop. 

It’s a mess, and it’s one that, during the week, prompted Mercedes-Benz owner Daimler to anticipate a profit fall for the year ahead. The new import tariffs on cars exported from the US to China would hit its high-margin SUV sales, it said in a statement.

“This effect cannot be fully compensated by the reallocation of vehicles to other markets [therefore] a negative effect on earnings is to be expected,” the company said.

The Trump administration has proposed the imported vehicles tariffs on the grounds that trade imbalances on many products threaten US national security.

Ultimately, car buyers in Australia might expect to see the flow-through effects of these escalating global trade tensions translate into higher-priced cars.

Is that a good reason to buy now? With the end-of-financial-year sales running until the end of this week, this might be the last opportunity to pick up a bargain for a while.