The former CEO of Aston Martin says tariffs are "very bad for the car industry" and worries that the US will "no longer be competitive with the Chinese" in AI and new energy as a result. Andy Palmer adds that the "inevitable" increase in prices will decrease car production volume, meaning "people will lose their jobs in foreign factories, including the UK". Report by Brooksl. Like us on Facebook at http://www.facebook.com/itn and follow us on Twitter at http://twitter.com/itn
Category
🗞
NewsTranscript
00:00Tariffs are a very blunt instrument.
00:02They are damaging in so many different types of ways.
00:06I think, first of all, they're damaging to the end customer,
00:09in this case, the US customer, because car industry typically
00:14makes 6% to 8% of profit.
00:16You add a 25% tariff on, obviously,
00:19that wipes out more than the profit.
00:21So inevitably, prices increase.
00:24So first point is it's inflationary.
00:27Prices go up.
00:28Secondly, obviously, pricing of cars is very elastic.
00:32So as price goes up, volume goes down.
00:36Volume down means that people lose their jobs
00:39in foreign factories, including the UK.
00:42So very bad for the car industry insofar
00:44as people are losing their jobs.
00:47The third thing I think is also important
00:49is a tariff is a barrier, and it's
00:51protecting a sick patient.
00:53And basically, what happens is if that sick patient is
00:56insulated for too long, they become fat and lazy
01:00and no longer competitive.
01:02And so my great worry for the US car industry
01:05is that it will be no longer competitive with the Chinese,
01:09particularly in AI and particularly in new energy.