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article imageRussia also threatens retaliation as tariff war heats up

By Karen Graham     Jun 23, 2018 in Politics
Russia is the latest country to threaten retaliation against U.S. tariffs imposed on steel and aluminum imports, warning on Friday that American cars could soon face higher taxes.
Russian Economy Minister Maxim Oreshkin said autos from the U.S. could be targeted, just a few days after saying the government is also likely to target American road building equipment with higher tariffs, reports Bloomberg News.
This latest move by Russia comes as President Donald Trump continues to escalate the war on tariffs with tweets and tirades. The president's latest threat, voiced on Friday is to impose tariffs of 25 percent on all vehicles crossing the border into the U.S.
Russia at first estimated the economic damage from the metals tariffs would be about $538 million. At the same time, the economic minister said this week that not more than US$100 million in imports from the US are likely to be hit with higher levies at this time.
Oreshkin said the government isn't planning on putting higher tariffs on U.S. pharmaceuticals - which apparently is a sensitive political issue.
Russia is the U.S.'s sixth largest trading partner, according to the Russian ministry. Imports from the US totaled $12.5 billion in 2017, with aircraft, vehicles, and pharmaceuticals among the largest individual components. Of that total amount, cars and other vehicles totaled $837 million last year.
Tempers are red hot over Washington's decision to slap tariffs on imports of steel and aluminiu...
Tempers are red hot over Washington's decision to slap tariffs on imports of steel and aluminium
How will U.S. car tariffs impact Canada?
According to the Global News, Canada sells more than 80 percent of its vehicle production to the United States. Without a doubt, tariffs will have a devastating effect on the Canadian auto industry.
Global News wanted to know how the Trump tariffs would impact car prices in Canada. Auto industry officials were asked to weigh in on the question.
According to a May 29, 2018 report published by the consulting firm Trade Partnership, a 25 percent tariff on auto imports would add $6,000 to a $30,000 U.S. car.
Under the current NAFTA rules, a passenger vehicle can travel tariff-free across North America as long as long as 62.5 percent of it is made in Mexico, the U.S. or Canada.
Now, a Canadian on average might pay $40,000 for a new passenger car. If we add the 25 percent tariff, the additional cost increase will come to about $5,000. This may seem incorrect, but according to Dennis DesRosiers, president of DesRosiers Automotive Consultants, the tariff only applies to about half of what makes up the final market price.
This scenario would only happen if Canada were to respond to U.S. auto tariffs by slapping identical duties on U.S. car exports into Canada. But DesRosiers doesn't believe this will happen.
Two other officials consulted on the tariff issue said they would think buying now, rather than later, might be a good idea. Brian Murphy, vice-president of research and editorial with Canadian Black Book, said anyone considering a new-vehicle purchase “may want to buy sooner rather than later.”
David Adams, president of Global Automakers of Canada, said: “Consumers are probably more likely to get a better deal now." But the bigger issue is that should the heated rhetoric on tariffs continue, this could cause the Canadian dollar to fall further, and this by itsel, would drive up the cost of a new vehicle.
More about us tariffs, Russia, Retaliation, Cars, Pharmaceuticals
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