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

Matt Posky
by Matt Posky
auto industry 8216 unites against u s import tariffs

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]

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2 of 25 comments
  • 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!

  • Arthur Dailey When I grew tired of the T-Bird trying to kill me by refusing to start at the most inconvenient times/places, I replaced it with a '79 fullsized Dodge (Sportsman) van. Similar to this but with a different grille and rectangular headlights. The 4 'captains' chairs in my van were pretty much identical to the ones in this van. Mine certainly was not as nicely finished inside. And it was a handful to drive in snow/ice. One thing that strikes me about this van is that although a conversion it does not seem to have the requisite dark tint on the windows.
  • Jeff S I am not a fan of Tesla and they were niche vehicles but it seems that they have become more common. I doubt if I get an EV that it would be a Tesla. The electrical grid will have to be expanded because people over the long run are not going to accept the excuse of the grid can't handle people charging their EVs.
  • AMcA The '70 Continentals and Town Cars may have been cousins to the standard body Fords and Mercurys, they didn't have to be disguised, because they had unique, unbelievably huge bodies of their own. Looking at the new 1970 interior, I'd say it was also a cost savings in sewing the seat. Button tufted panels like the 1969 interior had require a lot of sewing and tufting work. The 1970 interior is mostly surface sewing on a single sheet of upholstery instead of laboriously assembled smaller pieces. FINALLY: do I remember correctly that the shag carpet shown under these cars was a Photoshop? They didn't really go so peak '70s as to photograph cars on shag carpets, did they?
  • Inside Looking Out Toyota makes mass market cars. Their statement means that EVs are not mass market yet. But then Tesla managed to make mass market car - Mode; 3. Where I live in CA there are more Tesla Model 3s on streets than Corollas.
  • Ltcmgm78 A lot of dirt must turn before there's an EV in every driveway. There must be a national infrastructure plan written by other than politicians chasing votes. There must be reliable batteries that hopefully aren't sourced from strategic rivals. There must be a way to charge a lot of EVs. Toyota is wisely holding their water. There is a danger in urging unplanned and hasty moves away from ICE vehicles. Do we want to listen to unending speeches every election cycle that we are closer than we have ever been to 100% electrification and that voting for certain folks will make it happen faster? Picture every car in your town suddenly becoming all electric and a third of them need a charge or the driver will be late for work. This will take a lot of time and money.