By on March 29, 2019

Of all the things that automakers hate, losing money has to hold a permanent place at the top of the list. If you aren’t making money, you can’t keep building cars — and if you aren’t building cars then you’re not much of an automaker. Following that almost irresponsibly oversimplified logic, it’s no wonder the industry has been hesitant to endorse President Trump’s suggestion that the United States may need to enact new import tariffs.

While seemingly eager eager to provide manufacturers with the tools to get things done, the current administration clearly wants it done in America — and isn’t above punishing those who refuse to reciprocate. As a result, lobbyists have begun putting in some overtime.  

“Nobody in the auto industry supports a 25 percent import tariff, unlike in the steel and aluminum tariff situation where you had the steel industry advocating for relief,” Jennifer Thomas, vice president of federal affairs at the Alliance of Automobile Manufacturers, said at a meeting with Bloomberg.

With car sales beginning to stagnate across the globe, another recession on the horizon, and manufacturers dumping vast sums of money into advanced technologies, nobody wants to get smacked with a 25-percent import duty simply because they weren’t fast enough in shifting production back to the U.S. But Trump remains concerned that imported light duty vehicles and auto parts may represent a severe economic threat — enough to place the country’s national security into question. The president is currently examining the Commerce Department’s probe into the matter under section 232 of the Trade Expansion Act.

A final decision on the issue should be reached by May 18th. However, White House economic adviser Larry Kudlow indicated, earlier this week, that it might take longer. Lobbyists and auto execs should be plenty busy either way.

Subaru, which is not represented by the Alliance of Automobile Manufacturers, sent America President Tom Doll to Washington earlier this week to announce that the company’s more than seven-year-long streak of monthly U.S. sales gains could end if new tariffs are imposed. “I came up here specifically to talk to our Congress people about these tariffs and the impact that they’re potentially having on our entire distribution chain and how that eventually is going to work itself through the distribution chain into our pricing,” Doll said on Tuesday. “This is something that we’re getting a lot of sympathy with from the Congress folks, so we’re hopeful that this resolves itself.”

While Subaru is more likely to be negatively impacted by import tariffs than other brands, its tune is a very familiar one. Over the last year, practically all automakers have said they’ll lose money and have to increase prices if new duties come to pass.

From Bloomberg:

A 25 percent tariff on all autos and parts could boost new vehicle prices by an estimated $4,400 on average, according to a 2018 study by the Center for Automotive Research. Imported vehicles prices could rise by $6,875 per vehicle and U.S.-made autos may see a $2,270 bump, according to the report, which estimated more than 700,000 U.S. jobs could be lost as well.

Business conditions in the auto industry are beginning to deteriorate due to softening auto sales, rising interest rates, vehicle transaction prices at or near record highs in addition to rising costs from Trump’s steel and aluminum tariffs and new levies on certain auto parts from China, said John Bozzella, president of the Association of Global Automakers.

“We have a significant challenge ahead of us if these go into effect,” he said.

[Image: General Motors]

Get the latest TTAC e-Newsletter!

25 Comments on “Auto Industry ‘Unites’ Against U.S. Import Tariffs...”

  • avatar

    It’s so blinking stupid. He acts like the US should make everything, and everyone else should buy everything from us. But what with? If they don’t get dollars from us, what can they use to buy things from us?

    Dollars out have to equal dollars in, or someone is burning the damn things.

    Exports are the price we pay to buy imports, just as jobs are what we do to buy things.

    • 0 avatar

      I doubt that the trade deficit is going to flip anytime soon, so I doubt that specific liquidity issue will make or break the tariff policy.

    • 0 avatar

      The US had a trade deficit of $621,000,000,000 in 2018 and $552,000,000,000 in 2017 and similar $XXX,000,000,000 in decades of years yet it is blinking stupid to try to get the # down?

      “Dollars out have to equal dollars in, or someone is burning the damn things.”
      Tell me where in and out are equal. I think your math is suspect.

    • 0 avatar
      Trucky McTruckface

      Why the hell shouldn’t the US try to make as much as we possibly can? More is better than less, this seems obvious.

      Trump talks in hyperbole. It’s his thing, and it’s a tactic. Of course he doesn’t think the U.S. is going to become some self-sufficient manufacturer that ceases trading with the world. But going around and hounding everyone that wants to outsource is more likely achieve some results than the typical inaction from Washington.

      Or do you honestly think it’s better to let corporations continue to gut what’s left of the manufacturing base, completely unchecked, so they can make a quick buck and temporarily boost their stock price?

      • 0 avatar
        James Charles

        What you produce must be competitive.

        Why doesn’t the US produce T shirts? Because it will cost lots.

        Just with the Right Wing Nationalists/Socialists under Trump will impact the standard of living negatively in the US.

        The tariff on metals might increase mill jobs, but it will destroy multiple manufacturing jobs.

        The US is a service economy with advanced manufacturing. That’s where the US can compete.

      • 0 avatar

        Trucky, the theory of competitive advantage was first formally published in 1817 and is still the cornerstone of macroeconomics – because it works.

        We have been proving since at least 1846 that tariffs kill jobs and reduce prosperity.

        And by the way, where do you get “what’s left of the manufacturing base”? US manufacturing output has doubled since NAFTA was signed. During the same period, direct manufacturing employment fell by 1/3 – jobs that were lost to technology, not trade deals.

    • 0 avatar
      Art Vandelay

      I think it is more he feels US companies that want to wrap themselves in the American Flag should actually make their products mostly here and everyone else should face a market similar to how their home country treats US imports. I’m OK with that in principle. I do think he needs to be more targeted in his application of these tarriffs. The EU isn’t China.

  • avatar

    Where do you think there are more votes? CEOs of auto companies or American auto workers in the Rust Belt?

    I’m not surprised at all that even companies that manufacture cars in the United States are against tariffs, they are all about outsourcing. Just ask GM.

    It used to be american car companies were largely on the same page as their workers with respect to imports. But that world is long gone.

    • 0 avatar
      Trucky McTruckface

      The American car companies, particularly GM, are despicable corporate citizens. For years they’ve scapegoated the worker as an excuse for their problems, while never truly addressing their operational and product problems that continued to make them unprofitable. And they rewarded the American public for their generosity in bailing them out…by continuing to screw over their workers.

      As far as I’m concerned GM and Ford can cease to exist if they aren’t going to meaningfully employ anyone in this country. Screw the nostalgia for their brands, it’s not like they make cars anymore, anyway. If I really want an import, I’ll buy one from somebody who actually makes decent vehicles.

      But the Orange Man is bad and the Orange Man wants tariffs, so trade imbalances and outsourcing CEOs must be good. We live in strange times.

  • avatar

    If the auto manufacturers are so serious about being against a 25% imported vehicle tariff, why haven’t they united to repeal the 50 year-old “Chicken Tax” tariff on imported trucks? This would be a good place for them to start and show solidarity/fairness for the US Market.

    • 0 avatar

      US automakers have to hate the Chicken tax, and have more to lose by it remaining on the books, especially the Big 3. All 3 have global vans they could import to the US duty-free. Ford pays the 25% duty on the Transit Connect imported from Turkey. Do you think they like it?

      Meanwhile there’s no realistic pickup truck or van “competition” from around the globe, to actually challenge Big 3 trucks, or any US sold pickups or vans of any size or class.

      • 0 avatar

        Ram and Ford replaced their traditional doghouse low-roof vans with tall Euro models (from Fiat and Ford Europe). Where do they build those?

        The American pickup, thanks to the chicken tax, is like an island species: it has been allowed to flourish and adapt solely to local conditions, to where it has become a completely different species from its cousins elsewhere in the world. I’m not sure anyone makes a truck overseas that fits the peculiar wants of our buyers. Those wants apparently include idiotic body lift even on 2WD trucks, ridiculously tall bed sides that don’t flip down for access, wheel humps instead of a flat cargo area, more length than fits in a garage or parking space, and the aero disaster of 18-wheeler styling for lousy MPG even with a turbo 4. Huh. Come to think of it, maybe letting some alternative commercial vehicles in would do us some good.

        • 0 avatar

          Did you even think it through? US fullsize pickups predate the Chicken tax, and btw Canada and Mexico don’t have a Chicken tax of any kind, same as South America.

          Then there’s the Tundra and Titan… How do they “flourish”??

          Most things in the US are of bigger proportions, no Chicken tax necessary. How does “SuperSize” translate in French, Portuguese, etc?

          The rest of the world has their own (tax based) automotive derived demons to deal with. That’s the only difference. Gray market US fullsize pickups are highly coveted, prized possessions, overseas, many paying exotic car prices for US fullsize pickups, including Tundras, in far off places like Australia.

          Maybe you overheard an errant Chicken tax rant somewhere, and didn’t bother to apply common sense to form your own opinion.

          Yeah some buyers of pickups actually prefer the high sides, lots of ground clearance etc. Or do you think automakers do those things because they’re hated??

          It’s a common myth surrounding parking. The US has about the smallest parking spaces known to man. Have you even been to a big US city or beach community?

          It’s too easy to rant about how “protected” or shielded US pickups are, but when asked which specific global pickups (or vans) are any kind of meaningful threat (did I mention US Lemon Laws?), they all just scamper off.

    • 0 avatar
      James Charles

      The US auto manufacturers (Big 3) just can’t drop the 25% Socialist and anti competitive tax on selected vehicle imports. It ingrained in their business model …. for 50 years as you pointed out. The Big 3 would be shattered with its removal.

      It will take a generation or two for the US 25% vehicle import tariff to be wound back. If the Trump Nationalist/Socialist add an additional 25% tax the Big 3 will lose more competitiveness than the existing 25% impost.

      So, the US Right Wing Nationalists/Socialists need to consider the negative position it leaves the Big 3 in. I suppose they are gradually becoming the Little 3, thats been on the board for years.

      • 0 avatar

        @BAF0 – Why wouldn’t the “other” US manufacturing automakers benefit just the same as the “Big 3” or not have the same or equal “competitive edge”?

        Is there a distinction once an auto is made in the US/NAFTA? Why would one car (Big 3), be “protected” any more than any others made in the US/NAFTA?

        You mention the “Little 3”, but didn’t that contraction happen from the lack of, or minimal historic US import tariffs to begin with?

    • 0 avatar

      I’m still torqued at the “Chicken Tax” because by the time I was old enough to buy one, the VW Type 2 pickups disappeared from the playing field. Booooo!

  • avatar

    Screw America. America is the service economy – move all engineering and manufacturing jobs out of US. Outsource baby, lay off and outsource!

  • avatar
    Art Vandelay

    Targeted tariffs that match tariffs on goods imported from the US, or equalize prices where a country is gaining an advantage via theft of IP or lax environmental standards are fine. We shouldn’t sit by idly and let industries be driven out of business because we won’t let companies rape the planet or because some other country stole the product a domestic company spent years and millions of dollars coming up with.

    I read an article where a Chinese EV is using Tesla’s autopilot…they have the stolen source code and didn’t even bother to change the user interface to hide it. That kind of nonsense needs to be accounted for. Even if they don’t sell the stolen product here US companies can’t compete over there if they don’t have to develop that sort of stuff.

    Tariffs are a last ditch effort to equalize that competitive disadvantage if governments won’t do anything about it.

    That isn’t most countries however so I don’t think a blanket approach is best here.

    • 0 avatar

      Yeah. I’m all for getting tough as nails with China, which has merrily screwed us for decades. But getting tough with Canada, for God’s sake, an ally so close the border effectively doesn’t exist in places? Getting tough with Europe, our ally on IP, trade, national security, etc.? The problem with Trump isn’t his determination to take action, it’s his refusal to study problems and develop a strategic plan; instead he acts rashly based on gut instinct, foolish pride, personal prejudices, and the goading of syncophantic talk-show agitators. He’s the bull and we’re the china shop, and that’s fine with him as long as he gets to strut and puff about being the bull.

  • avatar
    James Charles

    Wow, I can’t believe some of the lunchroom economics here. Some of the comments must be looking for a bite.

  • avatar

    Why can’t a super-majority of people understand that tariffs are a negotiating tactic to force other countries to renegotiate current trade deals? Looks like it’s about to work out with China!

Read all comments

Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • 28-Cars-Later: Then get one more year out of it before something expensive breaks.
  • 28-Cars-Later: Your Bolt? Carvana has them listed out your way for 21,9-22,9, were they retailing for much less?
  • dal20402: In the last few months my “green full electric nonsense” has appreciated more in percentage...
  • CKNSLS Sierra SLT: theflyersfan Personally I would never finance a vehicle for 84 months, but transaction prices...
  • ajla: Like if the C8 Z06 was a $90K version of this, would it be so bad? Q&t

New Car Research

Get a Free Dealer Quote

Who We Are

  • Adam Tonge
  • Bozi Tatarevic
  • Corey Lewis
  • Mark Baruth
  • Ronnie Schreiber