The Los Angeles Post

Business groups warn that auto tariffs could kill US jobs, hurt economy

by · Published · Updated

Automakers and manufacturers are warning that President Trump’s push for steep tariffs on imported cars could cost jobs in the U.S. and damage the economy.

Business groups sent in comments this week to the Commerce Department, which is investigating whether Section 232 tariffs should apply to imports of automobiles and auto parts in the interest of national security.

General Motors Co. delivered a harsh warning to the Trump administration, saying that a 25 percent tariff would likely lead them to reduce U.S. operations and cut jobs.

“If import tariffs on automobiles are not tailored to specifically advance the objectives of the economic and national security goals of the United States, increased import tariffs could lead to a smaller GM, a reduced presence at home and abroad for this iconic American company, and risk less — not more — U.S. jobs,” GM wrote in comments submitted Friday.

GM, the largest U.S. automaker, operates 47 manufacturing facilities and 25 service part facilities across the country, employing approximately 110,000 people.

“The threat of steep tariffs on vehicle and auto component imports risks undermining GM’s competitiveness against foreign auto producers by erecting broad-brush trade barriers that increase our global costs, remove a key means of competing with manufacturers in lower-wage countries, and promote a trade environment in which we could be retaliated against in other markets,” GM wrote.

Trump in March announced steep tariffs on steel and aluminum imports, providing temporary exemptions for close trading allies, including Canada, Mexico and the European Union.

The exemption, however, was revoked in May when Trump levied a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports, provoking those allies to respond with retaliatory trade measures.

Trump argued that his administration was imposing the tariffs in the interest of U.S. national security, citing rarely used Section 232 laws.

In May, Trump called for an investigation into whether auto imports pose national security risks.

The U.S. Chamber of Commerce came out strongly against Trump’s tariffs plan, saying that if it is carried out “it would deal a staggering blow to the very industry it purports to protect and risk igniting a global trade war.”

“In fact, the U.S. auto industry is prospering, and the vast majority of industry stakeholders do not support these proposed tariffs,” the Chamber said.

The National Foreign Trade Council (NFTC) said auto tariffs will raise costs for automakers, which will eventually hit customers.

NFTC President Rufus Yerxa said the tariffs will make it nearly impossible for U.S. manufacturers to sell their cars abroad due to retaliatory tariffs from other countries.

“Today, NFTC joined the U.S. auto industry in opposing new tariff barriers on autos and auto parts under Section 232 because such action will cause greater harm than good to America’s auto industry, which is now the world’s most competitive and dynamic producer,” Yerxa said.

Last year, the United States exported 2 million automobiles but, Yerxa said, that number can grow if the government focuses on opening foreign markets “instead of raising barriers and costs here at home.”

“New tariffs on autos and parts, especially on top of the already-damaging steel and aluminum tariffs, will drastically raise production costs for our auto companies, who will have to pass those costs on to consumers,” he continued.

Though it did not file comments with the Commerce Department, Ford Motor Co., said lower tariffs are better for jobs and the economy.

“As the top U.S. exporter of vehicles, we believe lower tariffs in every market will support growth and jobs,” Ford said in a statement to The Hill.

“We urge the U.S. to work with its trading partners to support policies that remove rather than create new barriers to trade,” the company said.

About 80 percent of what Ford sells in the U.S. is built in the United States.

Akio Toyoda, chairman of Japan Automobile Manufacturers Association (JAMA) said his group is “gravely concerned” about the Department’s investigation, saying it will “create uncertainty among automobile users in the U.S. and people involved in the motor vehicle industry.”

Studies estimate that tariffs could increase the price of an imported $30,000 car by about $6,400 and cause up to 195,000 U.S. workers to lose their jobs, JAMA said.

“The very basis of the Section 232 investigation is wrong,” JAMA said in comments filed Friday.

In its filing on Friday, The National Association of Manufacturers said Trump’s tariffs stand to undermine the sector, ultimately “[giving] an edge to foreign production at the expense of U.S. manufacturing, job growth, our economy and ultimately U.S. national security.”

Global Automakers, which represents auto giants like Honda, Subaru and Toyota, blasted the Trump administration’s investigation, saying that the Commerce Department has not spelled out its theory for how imported cars and trucks “are relevant to U.S. national security.”

“America does not go to war in a Ford Fiesta,” the group said.

U.S. auto production has doubled over the past decade, and the sector employs nearly 8 million Americans — nearly 50 percent more than it employed in 2011, according to the U.S. Chamber of Commerce.

Trump threatened last week to impose a 20 percent tariff on auto imports in an attempt to leverage European Union leaders to seek trade talks with the U.S.