US President Donald Trump is taking decisions one after the other. Earlier this month, he has imposed a tariff of 25 percent on the cars coming from another country in America. While Tesla’s tension has increased on the one hand, the world is also expected to harm economy like China and India. Whereas the reality is that his decision can be ‘great destruction’ of America’s economy.
America is a service based economy today. There is not as much work in the manufacturing sector as in the service sector at this time. In such a situation, if the US increases the tariff on imported cars, then the price of cars will increase rapidly there. In such a situation, experts believe that it will work to reduce the demand of cars in America. Analist firm like Goldman Sachs has also predicted this.
Car will become expensive
Goldman Sachs says that the decision of the Trump government’s tariff will increase the price of cars rapidly in the next 6 to 12 months. In the US, the price of cars can grow from 2,000 to 4,000 dollars. Not only this, this decision of Donald Trump will increase the total cost of America’s auto industry to $ 100 billion.
Automotive sector analyst company such as Boston Consulting Group believes that the total cost of car companies from Trump Tariff will increase from 110 to 160 billion dollars. This will affect 20 percent of the new cars in America. At the same time, the price of old or second hand cars will also increase rapidly due to increase in demand.
Think Tank Center for Automotive Research says that this will increase the cost of American car company General Motors, Ford Motor and Stalentis to $ 41.9 billion.
American economy will have ‘great destruction’
There is a possibility of demand to fall in the US due to Trump tariff. It will give a big blow to the economy of America. The condition of American economy is already very critical. His trade deficit has been around 1 trillion dollars for 4 consecutive years. In such a situation, increasing inflation and declining demand in the economy can push it into the swamp of ‘recession’. This can lead him to ‘Mahavinash’ like ‘The Great Depression’.