According to the document, which is open for comments until Friday, January 10, the decision to increase tariffs may be adopted without the need to first go before the Committee on Customs, Tariffs and Foreign Trade Affairs.
The Ministry of Commerce, Industry and Tourism of Colombia presented for comments a draft decree that would modify Article 1 of Decree 1881 of 2021 and increase tariffs on vehicles, spare parts and tires by between 10 and 20%.
With this amendment, the entity seeks to "strengthen and protect the Colombian automotive industry and generate more favorable conditions for attracting new investments aimed at the production of different types of vehicles and their parts in the country."
According to the document, which is open for comment until Friday, January 10, “the decision to increase tariffs may be adopted without the need to first go before the Committee on Customs, Tariffs and Foreign Trade Affairs.”
The draft decree would increase tariffs on tires, brakes, refrigeration units, trucks weighing more than 5 tons, and screws, paint, glass, brakes, coil springs, among other components of a cargo vehicle.
However, unions such as Colfecar and Fedetranscarga are asking the entity to reconsider the project, since such an adjustment would cause an increase in logistics costs and affect a sector “that is on the brink of a crisis due to a drastic reduction in the volume of cargo transported due to the paralysis and/or continued contraction of sectors such as industry, commerce, mining and construction.”
According to Colfecar, the sector has suffered losses of $4.1 billion due to “loss of profits” due to road closures, infrastructure failures and blockades. The union also mentions the effects caused by the deterioration of road safety, “reflected in a wave of attacks against cargo and passenger vehicles that has forced traffic restrictions 24 hours a day in some departments. Added to this are high costs due to interest rates and the negative impact of the devaluation of the peso against the dollar, which has increased the costs of inputs.”
The union also recognized the importance of strengthening the national industry, “but Colombia lacks an automotive industry capable of supplying domestic demand. We depend on imported vehicles, spare parts and other inputs such as tires, whose acquisition is already subject to the fluctuation of the dollar and is also subject to a 19% VAT. A tariff increase from 10% to 20% without local alternatives is counterproductive and could worsen the crisis in the sector.”
In this regard, Fedetranscarga mentions that “the tariff increases between 10% and 20%, doubling or tripling the rates currently charged on these imported goods.” The union adds that “expanding and diversifying the national productive base is a laudable goal, however, according to what is stipulated in the draft, it is considered that this is not achieved with this proposal, which does allow the national government to collect more income by taxing freight transport in trucks, the intention of the draft decree, so the real motivation is different from that stated in the recitals.”
Thus, the unions consider that this decision implies a new obstacle to the renewal of the vehicle fleet, which already presents great difficulties due to the impossibility of small owners to assume this debt due to the high cost of the dollar and interest rates, "to which must be added the expiration of the 'IVA CREI' benefit last December, so increasing tariffs would make this renewal difficult, aggravating the aging of the vehicle fleet, whose average age is 21 years," argued Colfecar.
Fedetranscarga gave an example: the tariff increase would directly affect the purchase price of a vehicle for transporting goods with a capacity of more than 5 tons and its operating cost. A mini mule with an import cost of $400 million CIF value, for example, after being imported would go from costing $420 million to $480 million, 14.3% more expensive.
“This increase would be reflected in the operating cost of the vehicle, where its cost and leverage, according to DANE (ICTC), represents 13.31% of the cost. This would affect the Cargo Transport Cost Index and the Producer Price Index (PPI), generating pressures on production costs. This tariff measure would strengthen the inflationary process in the cargo transport sector, which has accelerated since the third quarter of 2024.”
Finally, the unions claim that the tariff increase is untimely because it would increase the cost of freight transport, by making spare parts and supplies and trucks with a capacity of more than 5 tons more expensive, “discouraging the modernization of freight vehicles and increasing the operating costs of the freight transport sector,” added Fedetranscarga.
