Plans mooted by US president elect Donald Trump to impose huge tariffs on imported vehicles could have a direct impact on the UK fleet market.
During his election campaign, he variously promised that tariffs of 100% or 200% would be imposed on all vehicles imported into the US, as well as 60% on all Chinese goods, which would directly affect electric vehicles (EVs) made in China.
According to the UK’s Association of Fleet Professionals (AFP), if implemented, such an increase in tariffs would have a dramatic effect on the global car and van market, especially for EVs.
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Paul Hollick, AFP chair, said that, if implemented, “tariffs at this kind of level would effectively make imported cars unsaleable in the US and, of course, there have also been sometimes substantial tariffs recently imposed in the EU”.
He acknowledged that there was confusion whether these tariffs were actual plans by the Trump administration or some kind of gambit to negotiate more advantageous trade deals.
“All of that production aimed at the US – especially large numbers of Chinese EVs – will inevitably make its way towards freer global markets, the UK being one,” added Hollick. “So far, the actions of new Chinese entrants have been quite measured but there will be a huge temptation to dump large numbers of cars and vans here at low prices, causing high levels of disruption.”
He said that it was conceivable that in response the UK government could decide that domestic manufacturers need similar protection and introduce tariffs of its own, or it could step back and let the market find its level.
“The future view looks quite murky,” he said.
UK fleets would be left in a difficult position, he explained, with vehicle buying decisions becoming hugely risky.
“On one hand, having access to a supply of cheap Chinese EVs would arguably be good for fleets in their transition to net zero, and also provide a boost to the retail EV market. However, this is likely to come at the risk of stability and a volatile market is ultimately a bad one where, for example, forecasting accurate residual values becomes very difficult.
He said that the imposition of tariffs by a major Western economy of the scale being promised were almost unknown in modern times and it was difficult to forecast the impact. “However, it’s also true that some economists are making quite dire predictions,” he added. “We await the outcome with some trepidation.”
The effect on the second-hand fleet EV market would also be hard to predict.
Fleet managers would be watching Trump’s statements carefully over the next few weeks, Hollick said.
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