Reciprocal Tariffs Become a Double-Edged Sword for the US, Here's the Impact

The Wall Street Journal, quoted on Tuesday (08/04), cited the Ford F-150, known as a US-produced pickup truck. The model has thousands of spare parts.

“These components are supplied by more than 24 different countries. Countries like Mexico, Canada, Romania,” said Terry Woychowski, President of Caresoft Global.

Components like the connecting rod, for example. The Wall Street Journal revealed its manufacturing begins with aluminum in Michigan.

It is then sent to Ontario to be shaped, followed by finishing in the US and processing in Mexico. After that, it is delivered to Wisconsin to be assembled with the piston rod.

Photo : Ford

Only then is the completed component brought to Michigan to be installed in the car's engine.

The process is not yet finished, as the engine is then shipped to Ontario before finally being installed in the car to be sold in the US and Mexico.

However, Mexico is one of two countries exempted by Trump from the latest reciprocal tariffs, although cars are still subject to a 25 percent tax.

Products included in the free trade agreement or USMCA (United States-Mexico-Canada Agreement) are not affected by the reciprocal tariffs.

“This is related to the good relationship we have built with the US government, based on collaboration and respect,” said Claudia Sheinbaum, President of Mexico.

Effect of Reciprocal Tariffs in Indonesia

Photo : KatadataOTO

It should be noted that Indonesia is subject to a 32 percent reciprocal tariff. Although it may not seem to have a direct impact on car prices, the component industry is one of those under threat.

This is because automotive component exports from Indonesia to the United States are now the second largest, after Japan.

The existence of tariffs can certainly have a major impact on the automotive component industry. Furthermore, cheap products from China in the Indonesian aftermarket sector have the potential to increase, weakening the competitiveness of local products.