Like Chicken Little, a plethora of auto news websites in the past several days have declared the sky is falling. After some terse comments by President Trump about slapping tariffs on cars imported to the U.S. from Mexico, sheer panic has rippled through the auto industry.
Would such a scenario be scary? Sure, but so are plenty of other scenarios. Previously, there was a threat of a border shutdown looming. Now that threat lurks further into the future, if Mexico doesn’t satisfy Trump’s demands to put a kink in illegal drugs from flowing over the border.
With soft sales for 2019, automakers are a wee bit touchy. When you threaten what CNBC loves to emphasize is the fifth-largest producer of assembled vehicles globally, it rocks the boat. Of course, CNBC and others neglected to mention that many of the cars, trucks, and SUVs assembled in Mexico don’t provide fat profit margins, which is the main reason they’re made in the country. Cheaper labor and other operational costs help offset paper-thin margins.
Meanwhile, not everyone is paralyzed with fear at these threats. American autoworkers, the little guys so many supposedly say they care about, potentially stand to benefit big if such a standoff goes into effect.
Of course, tariff costs get passed to consumers, and nobody will be happy about that. It would make Mexican-made models like the Nissan Sentra, Dodge Journey, or the upcoming Chevrolet Blazer something car shoppers would probably pass over, or pass over more than they already do.