Auto industry sounds off on vehicle tariffs

Opposition Grows Against Trump's Auto Tariff Plan

Trump's tariffs are uniformly opposed by the US automotive industry.

In separate comments to the Commerce Department, the Auto Care Association, which represents 150,000 manufacturers, distributors and sellers of motor vehicle parts and related goods, that its economic study estimated that the cost of car ownership would increase by more than $700 per year per household should the tariffs be imposed.

The stakeholders are presenting a united front against the Trump administration's unprecedented investigation into whether imports of autos and auto parts pose a national security threat, saying a potential 25 percent tariff to limit foreign competition would undermine the very manufacturing growth the president seeks.

The Trump administration on Thursday came under withering criticism from automakers, foreign governments and others as officials consider imposing tariffs of up to 25 percent on imported cars and parts, a levy that could hike vehicle costs, hurting auto sales and industry jobs. It's the same process Trump used to craft the tariffs on steel and aluminum imports he announced in early March.

Commerce Secretary Wilbur Ross opened the hearing seeking to dispel the notion that the Trump administration has made up its mind.

There seems to be little support for the proposed tariffs.

Consumers will bear virtually all the higher fix costs, said the American Insurance Association, National Association of Mutual Insurance Companies and Property Casualty Insurers Association of America in comments jointly submitted to the Commerce Department.

The stakes are high for the world economy and the global auto industry.

She noted that the USA exports more than $100 billion of autos and parts annually to other countries, while "there is a long list of products that are largely no longer made in the US, including TVs, laptops, cellphones, baseballs, and commercial ships". They argued that the taxes would raise auto prices, squeeze automakers by increasing the cost of imported components and invite retaliation from USA trading partners - and allies - like Japan, the European Union and Canada.

Opposition Grows Against Trump's Auto Tariff Plan

Top executives of Michelin North America, Cooper Tire & Rubber, Sumitomo Rubber Industries said in a joint letter to the Commerce Department that rising costs for auto parts makes consumers "wait longer before making a new car purchase or maintaining the safety of their vehicle". Offshoring has hurt workers and begun to erode the technological advantage that the US has long enjoyed, the union wrote.

One of the dealerships that Jeff Crippen owns in Lansing, Michigan, sells only Mazdas, all of which are manufactured in other countries and shipped to the US, mainly from Japan.

"We caution that any rash actions could have unforeseen consequences, including mass lay-offs for American workers", the UAW wrote.

Consumer preferences for trucks, SUVs and CUVs complicate production decisions since US plants making these models are already running at full capacity.

According to a new analysis from the Center for Automotive Research, an industry-backed group, a 25 percent tariff on automotive parts imports will result in up to 2 million fewer vehicle sales in the US, triggering more than 714,000 job losses in the industry and reducing USA economic output by $59 billion.

CAR, a think tank supported by the auto industry, estimated that 2 million fewer vehicles would be sold and the industry would lose nearly 750,000 jobs, including 117,500 at new-car dealerships. Consumers would also feel the pinch in higher used-car prices due to heightened demand and higher fix costs, vehicle said.

Critics lined up to urge the administration to reject auto tariffs.

Three in 10 shoppers said they would switch the type of vehicle they are considering, either from new to used, or certified pre-owned, or from imported models to domestically produced vehicles.

Used vehicle prices would also rise as more consumers turn away from new purchases and the selection of cheaper imports would likely be reduced as manufacturers made a decision to no longer offer some models.

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