Automakers don’t want tariffs on import cars

Trump looking into 25 percent levy; U.S. firms fear possible retaliation

America’s auto industry is bracing for a potential escalation in President Donald Trump’s tariff war with the world, one that could weaken the global auto industry and economy, inflate car prices and trigger a backlash in Congress.

Late Sunday, the Commerce Department sent the White House a report on the results of an investigation Trump had ordered of whether imported vehicles and parts pose a threat to U.S. national security. Commerce hasn’t made its recommendations public, and the White House has so far declined to comment. If Commerce did find that auto imports imperil national security, Trump would have 90 days to decide whether to impose those import taxes.

Trump has repeatedly invoked his duty as president to safeguard national security in justifying previous rounds of tariffs. An obscure provision in trade law authorizes a president to impose unlimited tariffs on particular imports if his Commerce Department concludes that those imports threaten America’s national security.

Whatever Commerce has concluded in this case, Trump has made clear his enthusiasm for tariffs in general and for auto tariffs in particular. Some analysts say they think Commerce has likely endorsed the tariffs, not least because the president has conveyed his preference for them.

Among Commerce’s recommendations “will certainly be tariffs because, hey, he’s a Tariff Man,” said William Reinsch, a former U.S. trade official and now a senior adviser at the Center for Strategic and International Studies, referring to a nickname that Trump gave himself.

Industry officials took part in a conference call Tuesday to discuss the possible steps Trump could take. They include tariffs of up to 25 percent on imported parts only; on assembled vehicles only; or on both vehicles and parts — including those from Mexico and Canada. The last option would be an especially unusual one given that the United States, Mexico and Canada reached a new North American trade deal late last year, and the legislatures of all three nations must still ratify it.

In public hearings last year, the idea of imposing import taxes on autos drew almost no support. Even U.S. automakers, which ostensibly would benefit from a tax on their foreign competitors, opposed the potential tariffs. Among other concerns, the automakers worry about retaliatory tariffs the affected nations would impose on U.S. vehicles. Many U.S. automakers also depend on imported parts that would be subject to Trump’s tariffs and would become more expensive.

A similar Commerce investigation last year resulted in the Trump administration imposing taxes on imported steel and aluminum in the name of national security. The administration has adopted an extraordinarily broad view of national security to include just about anything that might affect the economy.

In addition to steel and aluminum, Trump has imposed tariffs on dishwashers, solar panels and hundreds of Chinese products. Targeting autos would further raise the stakes. The United States imported $340 billion in cars, trucks and auto parts in 2017.

If the administration imposed 25 percent tariffs on imported parts and vehicles including those from Canada and Mexico, the price of imported vehicles would jump more than 17 percent, an average of $5,000 each, according to estimates by IHS Markit. Even the prices of vehicles made in the U.S. would rise about 5 percent, or $1,800, because all of them use some imported parts.