AutoNation CEO: Tariffs will drive up cost of cars

Auto prices in the United States will rise “dramatically” if the Trump administration imposes tariffs, AutoNation Chairman and CEO Mike Jackson told CNBC-TV’s “Squawk Box” on Wednesday.

“Automotive tariffs will make steel tariffs look like a company picnic … This will unleash a real trade war. The numbers are so much bigger. It will raise prices dramatically for consumers in the United States. It will be inflationary,” said Jackson, who also chairs the Federal Reserve Board of Atlanta.

His comments followed an automotive trade group saying it’ll tell the Trump administration a threat to impose a tariff of up to 25 percent on imported passenger vehicles would cost U.S. consumers $45 billion annually, or $5,800 per vehicle.

Jackson, who leads the largest U.S. auto retailer, based in Fort Lauderdale, said he thought the Trump administration would’ve embraced Europe’s recent offer to go tarifffree. He said on CNBC that BMW produces more vehicles in the U.S. at its plant in South Carolina than it sells, exporting primarily to China.

“BMW’s bold step to manufacture very complex vehicles in the Southeast led to Mercedes-Benz and Volkswagen building plants in Tennessee. The Germans should be congratulated for their investment in the United States. So it’s a bit of a head-scratcher to threaten BMW with tariffs,” Jackson told CNBC.

“The Europeans are already doing what you want. You want to punish them for doing what you want?” he said.

Colin Brown, chairman and CEO of Deerfield Beach-based JM Family Enterprises, whose Southeast Toyota Distributors operates 177 dealerships, said the automotive tariff proposals will “not only directly increase the cost of building a car, but then could increase the vehicle purchase price by up to 25 percent.”

As one example, the Toyota Camry — made in Kentucky and the best-selling car in America — would face $1,800 in increased costs, according to a statement by Toyota Manufacturing North America.

“We are deeply concerned with the current administration’s threat of tariffs on imported automobiles and automotive parts. To treat auto imports, such as the Toyota Prius passenger car, as a national security threat defies any form of logic and would create major economic upheaval,” Brown said. “There is no need to impose tariffs as the U.S. automotive industry is the healthiest it has ever been. We believe free and fair trade is the best way to create sustained growth and provide more choices and greater value for American consumers.”

The Alliance of Automobile Manufacturers — a group representing General Motors Co., Toyota Motor Corp., Volkswagen AG and other major automakers — said it will file comments with the U.S. Commerce Department later this week, according to a report Tuesday by Reuters.

“Nationwide, this tariff would hit American consumers with a tax of nearly $45 billion, based on 2017 auto sales. This would largely cancel out the benefits of the tax cuts,” spokeswoman Gloria Bergquist told the wire service. Consumers would also face higher costs of imported auto parts when buying vehicles from U.S. and foreign automakers, she said.