U.S. auto industry unites against the recommended new tariffs on imported cars and parts

The U.S. auto industry is forming a strong lobby to push President Donald Trump against imposing new tariffs on imported cars and parts. They argue that such tariffs would handicap an industry which is already facing slow growth. The Groups have brought together automakers, dealers, parts suppliers and aftermarket companies to stand against a common goal of opposing the proposed new levies.

Industry officials worry the new levies are much more than a negotiation clause in Trump’s trade talks with the European Union, Japan and China.

“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,” said Jennifer Thomas, vice president of federal affairs at the Alliance of Automobile Manufacturers during a media brief.

Trump is currently reviewing the recommendations of Commerce Department’s investigation under section 232 to determine whether imported cars and parts pose a threat to national security. Trump used the same section of the Trade Expansion Act to slap duties on imported aluminium and steel. Trump has until May 18 to decide on his response to the Commerce recommendations.

The probe covered imports of vehicles including SUVs, vans and light trucks, as well as auto parts. According to a 2018 study by the Center for Automotive Research, 25% tariffs on auto and parts import would increase new vehicle prices by about US$4,400 on average. Imported vehicles prices could rise by US$6,875 per car and U.S.-made autos may see an increase of US$2,270. The report also sees the possibility of 700,000 U.S. job losses.

Lower auto sales, rising interest rates and rising costs from Trump’s steel and aluminium tariffs and new levies on certain auto parts from China are already putting pressure on the auto industry. Prices of spare parts may also increase with the new levies.

25% and 10% duties on steel and aluminium imports have already added about US$400 extra costs per car on average to Ford, General Motors, and Fiat Chrysler, said Matt Blunt, president of the American Automotive Policy Council.

Tariffs on metal and auto parts are creating concerns for parts suppliers, who are already affected by lower auto sales in the US. Many companies have closed plants due to higher steel and aluminium costs.