Auto Industry 'Unites' Against U.S. Import Tariffs

Matt Posky
by Matt Posky

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]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • James Charles James Charles on Mar 31, 2019

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

  • SatelliteView SatelliteView on Mar 31, 2019

    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!

  • 6-speed Pomodoro I had summer and winter tires for a car years ago. What a pain in the butt. You've permanently got a stack of tires hogging space in the garage and you've got to swap them yourself twice a year, because you can't fit a spare set of tires in a sportscar to pay someone else to swap 'em.I'd rather just put DWS06's on everything. But I haven't had a sportscar in 8 years, so maybe that's a terrible idea.
  • ShitHead It kicked on one time for me when a car abruptly turned into my lane. Worked as advertised. I was already about to lean into the brake as I was into the horn.
  • Theflyersfan I look at that front and I have to believe that BMW and Genesis designers look at that and go "wow...that's a little much." Rest of the car looks really good - they nailed the evolution of the previous design quite well. They didn't have to reinvent the wheel - when people want a Mustang, I don't think they are going to cross-shop because they know what they want.
  • Theflyersfan Winters go on around Halloween and Summers go on in late March or early April. However, there were some very cold mornings right after the summers went on that had me skidding a bit due to no grip! I do enough (ahem) spirited driving on empty hilly/mountain roads to justify a set of sticky rubber, and winters are a must as while there isn't much snow where I am (three dustings of snow this entire winter), I head to areas that get a bit more snow and winter tires turns that light, RWD car into a snow beast!
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