Republicans in Washington have proposed a border adjustment tax (BAT), reportedly as high as 20%, on all goods or services, including automobiles and auto parts, coming into the United States from all nations, even those with which we have existing trade agreements. The BAT is crucial to the whole Republican tax proposal, and would pay for many of its proposed corporate tax cuts.
The new tax would be devastating to both dealers and manufacturers, and not just international nameplates. Even the most American-made vehicle sold in the U.S. would be subject to a significant price increase because auto parts, many of which are made overseas, will be subject to the BAT.
Opponents say consumers would ultimately foot the bill for the new tax in the form of higher prices on vehicles. The increase in vehicle prices will force many consumers out of the market for a new vehicle and, as a result, vehicle demand will drop.