Auto industry pushes Trump to retract proposed import tariffs
Firms warn White House of ‘domino effect’ that would harm U.S. workers, economy
Auto makers, parts suppliers and dealers are joining forces to push back against the Trump administration’s proposal to apply tariffs of up to 25% on vehicles and components imported into the U.S., contending the administration’s trade policy will backfire and lead to higher prices and lost jobs.
President Donald Trump has complained of a trade imbalance and argued that Germany and Japan don’t import enough U.S.made vehicles. He has repeatedly called on both foreign and domestic auto makers to create more U.S. manufacturing jobs by building more factories in the country.
Industry representatives have petitioned President Donald Trump to back off on his threats to place tariffs on imports, with plans to amplify their message in digital and newspaper advertisements.
“Raising tariffs on auto and auto parts would be a massive tax on consumers, who buy or service their vehicles,” according to an open letter to the president and jointly submitted by the auto industry’s main lobbying groups, including trade organizations that represent the foreign and U.S.-based auto makers, as well as auto dealers.
The White House and U.S. Commerce Department had no immediate comment.
The Commerce Department will hold hearings Thursday on the proposed tariffs as part of an investigation launched in May into whether it can use a national-security law to impose duties on foreign-sourced cars and car parts.
Auto industry officials have grown increasingly alarmed at the prospect of adding yet another tariff to the ones already levied by the White House on aluminum, steel and some Chinesemade
goods.
The Alliance of Automobile Manufacturers, which represents 12 of the largest auto manufacturers, warns the tariffs risk triggering a negative “domino effect” that would harm American workers and the broader economy, according to prepared remarks shared ahead of the Commerce Department hearing
The Commerce Department will make a determination on the security threat and what remedies should be proposed, a process that could take several months. No final decision can be made until the process is complete.
Support for the tariff proposals came from union groups, which generally back the president’s trade policies and efforts to protect American jobs and domestic
production capacity.
The United Auto Workers union—which represents workers at General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV—has expressed support for the administration’s investigation, calling it “long overdue.” The union stopped short of endorsing the tariffs and instead urged a more “targeted” approach, such as taking measures to stop the influx of auto investment in Mexico in recent years.
The U.S. imported more than $191 billion worth of foreignmade vehicles last year and $143 billion in auto parts, according to the Commerce Department. Auto makers building cars in the U.S. and employing tens of thousands of workers would be hit by higher costs if the tariffs were enacted,
analysts and car makers said.
Toyota Motor Corp. said it opposes the tariffs, because even though it builds cars in the U.S., it uses foreign-sourced parts that would be subject to the levy. For instance, about 30% of the parts used in a U.S.-built Toyota Camry come from outside the country. A tariff on those parts would increase the price of a Camry by $1,800, the company said.
“Our viewpoint on a 25% tariff on automotive and automotive parts is that it is something that is misguided,” said Brian Krinock, senior vice president, vehicle plants for Toyota North America. “We believe in the end the consumer will end up having to pay the additional costs.”
General Motors also has said the proposed tariffs would raise its costs, hurt the company’s
global competitiveness and put U.S. jobs at risk.
Mr. Trump has said he plans to use the 25% tariff threat as leverage in other trade negotiations, such as the continuing talks between Mexico and Canada over renegotiating the North American Free Trade Agreement. “If they’re not fine, I’m going to tax their cars coming into America, that’s a big one,” Mr. Trump said earlier this month.
That has led some to question whether the comments provided at the hearing will have an impact. “This is a show trial,” said Adam Posen, president of the Peterson Institute for International Economics. “This is something where they predetermined the verdict and the schedule on which the verdict would be read.”