Investing.com — In a note to clients Tuesday, German Bank (ETR:) analysts shared five key takeaways from their recent expert call with Curtis Dubay, chief economist at the U.S. Chamber of Commerce, where they discussed the impact of Trump 2.0 on the automobile industry.
1) The discussion highlighted that significant changes to electric vehicle (EV) tax credits are unlikely before the end of 2025 due to the legislative process required for policy changes.
The call of experts emphasized that any changes President-elect Trump might wish to implement would require congressional review and approval, a process that could not be circumvented even by the Department of Government Effectiveness (DOGE).
2) This clarification comes as recent headlines suggest an outright elimination of tax credits for electric vehicles, which “may not be representative of the Trump administration's top priorities,” the Deutsche Bank note said. .
3) Additionally, the analysis suggests that the Trump administration may not immediately prioritize eliminating tax credits for electric vehicles. Instead, the topic is expected to surface during bipartisan negotiations on tax reform, especially with the Tax Cuts and Jobs Act (TCJA) set to expire in 2025.
4) Additionally, DOGE’s ability to act as “CEO” of the government is limited by legal and procedural constraints. “Two years is unlikely to be enough time to implement major changes, but areas where it can be examined are likely related to waste, fraud and spending abuses,” the analysts said.
5) Finally, the conversation turned to the topic of tariffs. Although imposing a blanket tariff on all imported products would require a national security justification, which could be difficult to justify, the possibility of reinstating tariffs against China and Mexico has been recognized as more likely to be considered.
President-elect Trump announced last week that he would impose significant tariffs on the United States' three largest trading partners – Canada, Mexico and China – in an effort to fulfill his campaign promises that could risk trigger commercial conflicts.
Trump, who is expected to take office on January 20, has proposed a 25% tariff on goods from Canada and Mexico, linking the measure to efforts to curb drug trafficking, particularly fentanyl, and to reduce the passage of migrants at the border. This approach appears to call into question the terms of an existing free trade agreement.
As for China, Trump has revealed plans to implement “an additional 10 percent tariff, above any additional tariff,” although the implications remain unclear.
He has previously pledged to revoke China's most favored nation trade status and impose tariffs above 60% on Chinese imports, a level far higher than those seen during his first presidency.
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