EU, Mexico automakers blast Trump auto tariff plan

Marco Green
July 20, 2018

U.S. Commerce Secretary Wilbur Ross attends a cabinet meeting at the White House in Washington, U.S., July 18, 2018. She noted that "our view is shared by over 2,200 comments that were filed before this hearing". It's the same process Trump used to craft the tariffs on steel and aluminum imports he announced in early March.

"Let me start by dispelling the notion that cars are a threat to national security", Jennifer Thomas, vice president of the Alliance of Automobile Manufacturers, told representatives of the Commerce Department at the start of Thursday's administrative hearing on proposed tariffs targeting imported cars and vehicle parts.

Automakers say the tariffs would drive up the cost of imported components and would invite retaliation by United States. trading partners.

U.S. President Donald Trump's administration has launched an investigation into whether auto imports pose a national security threat and threatened to slap the tariffs on cars from the European Union and elsewhere.

A study by the Ann Arbor-based Center for Automotive Research, commissioned by the National Automobile Dealers Association, forecasts that the price of a typical imported vehicle would rise $6,875, while the price of a USA -assembled vehicle would jump $2,270. Yet it called for "targeted measures" to strengthen US manufacturing, stopping short of advocating in favor of new vehicle and component tariffs.

Separately, a coalition of seven auto industry trade groups representing almost every major automaker, auto dealers and parts companies said in a letter to Trump on Tuesday that the tariffs will be a "massive tax" on consumers, leading to "increasing vehicle service and fix costs that may result in consumers delaying critical vehicle maintenance".

Figures from the US government's International Trade Administration show more than 70 per cent of USA exports previous year were to Canada and Mexico "so including these two trading partners in the trade action would be particularly harmful to USA automotive parts producers".

Over all, the American automobile industry employs 50 percent more people than it did in 2011, according to the U.S. Chamber of Commerce, and domestic production has doubled in the last decade.

Auto tariffs would escalate global trade tension dramatically: The U.S. last year imported $192 billion in vehicles and $143 billion in auto parts - figures that dwarf last year's $29 billion in steel and $23 billion in aluminum imports.

But the vehicle study found USA auto production can't quickly increase, taking at least a year to convert an under-utilized plant and on average two years to build a new assembly facility.

"New tariffs or quotas would also reduce competition and consumer choice; increase the cost of used vehicles; and raise the cost of getting vehicles serviced and repaired", said Peter Welch, president of the National Automobile Dealers Association, which commissioned the study.

Welch said the tariffs would push the average new-car payment to $611 a month from $533 a month (over a 69-month loan term on average).

Administration officials and congressional aides say the tariff probe is in part created to win concessions during ongoing NAFTA renegotiation talks, but note that Trump has told aides he wants to impose tariffs before the congressional elections in November. "In fact, it's just the opposite", he says.

"Imports are just a part of our American operation, but they are vital to the success of all the others", Hyundai's Hall told the government officials seated at the table opposite him.

Commerce has until February to report its findings to Trump, who has the final say on any tariffs. "I am one of thousands of American workers whose livelihoods would be put at risk by a substantial tariff on automotive goods".

Other reports by Click Lancashire

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