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Vehicle prices to soar

The average price of imported vehicles sold in the United States could jump by thousands of dollars if the Trump administration imposes tariffs under a worst-case scenario provided by the Center for Automotive Research.

The Michigan-based think-tank estimates U.S. consumers would see the average price of new imports rise by US$6,875, if a 25 per cent tariff is applied, or up to US$2,750 if a 10 per cent tariff is imposed to imports from all countries.

The impact on American consumers would be substantially less if Canada and Mexico — partners with the United States under the North American Free Trade Agreement — are exempted.

CAR estimates the average cost of imports sold in the United States would rise by US$3,980 if a 25 per cent tariff is applied only to non-NAFTA countries and by US$1,345 if a 10 per cent tariff is levied on only non-NAFTA imports.

A quota that limits the number of vehicle and parts imports to 80 per cent of 2017 levels would also be costly, pushing up the price by US$6,610 if all countries are included or up US$5,583 in Canada and Mexico are excluded.

The report was issued ahead of congressional hearings into the Trump administration's threat of tariffs or quotas to protect its national security.

President Donald Trump's strategy appears aimed at returning the auto supply chain back to the United States.

But the CAR study found U.S. auto production can't quickly increase, taking at least a year to convert an under-utilized plant and on average two years to build a new assembly facility.

The U.S. economy would contract by between US$6.4 billion and US$62.2 billion, it said.



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