It was late afternoon in Europe, early morning in the USA, when the e-mails started pouring in. They were all from friends, event organizers and collectors on the other side of the Atlantic, and they were all saying the same thing: President Donald Trump’s proposal to slap a 25% import duty (representing a huge increase from the current 2.5%) on all cars and spare parts entering the United States of America had been published in the Federal Register of May 30th, 2018, thereby formalizing a procedure, started a week earlier, to have the law approved.
This kind of approach, implemented by a President of the USA in the form a presidential decree, bypasses the whole phase of political discussions, analysis and consideration by the Senate and Congress. It is a rather undemocratic way of acting, usually only used in emergencies when it is necessary to fast track decisions. Given that this Notice of Request for Public Comments and Public Hearing envisaged a June 22nd deadline for registering to make comments, and the hearing date has already been set for July 19th and 20th, there is clearly a very real and serious risk that this law will be passed. Formally, this step is being justified as a national security measure, it being argued that imports of cars, SUVs, light trucks and light vans, and also spare parts, constitutes a serious threat to the USA, liable to weaken (or kill off) domestic manufacturers and leave them unable to react adequately to help the country in times of need.
Nowhere does the request for this import duty specifically mention classic cars (or their parts) or used vehicles. Most likely, President Trump, in coming up with this idea, did not even give the classic car world a thought. Bureaucracy, however, can be a dangerous thing, anywhere in world. In fact, all that is not specifically excluded must, in most cases, be considered included. What this means, for us, is that as soon as this law goes through, all cars imported into the USA (not only new, but also classic and used ones) will be subject to an extra 25% in tax on their declared value, and the same applies to spare parts (maybe even used ones too). This will undoubtedly have repercussions on the car and classic car worlds. The real impact this measure will have is currently hard to forecast, but it will inevitably felt by the entire car collecting community, given that 50% of all the classic cars in the world are currently in the USA.
Some considerations on the import duty on classic cars
It is important to stress that we have, so far, no answers to give. It is hard to envisage how this 25% levy on cars and car parts (providing it is approved of course) might affect the classic car world, as there are still so many aspects that we would need to clarify with the USA government before trying to draw any conclusions. There are, however, several important things that we can say for sure:
- values will be affected in an artificial way, even though right now it is hard to say in exactly what way
- the freedom of today’s classic car market, in which classics are easily sold and bought all around the world, will become a thing of the past
- spare parts will be more expensive, which will force many to restrict their use of their cars and therefore reduce the number of cars worth restoring
- the impact will be felt by the classic car world as a whole, and have a knock-on effect on service providers. The services offered by those managing to survive in what will become a shrinking market will inevitably become more expensive. And because there will also be those that do not survive, some of the services that are easily sourced today will become difficult to find.
Continue reading at the following link: https://classiccartrust.com/2018/06/in-debate-25-import-duty-on-classic-cars-in-the-us/