The U.S. auto industry is banding together in a lobbying effort to prevent President Trump from implementing new import tariffs of up to 25 percent. In an industry divided on policy more often then not, this lobbying effort shows just how serious this potential threat is to several groups in the auto industry; including automakers, dealers, parts suppliers, and aftermarket companies.
The new potential tariffs the auto industry is so vehemently against come as a recommendation in the Commerce Department report that was given to President Trump earlier this year. The Commerce Department report is a result of an investigation under section 232 of the Trade Expansion Act, to understand how imports of light vehicles and parts impacted national security. Although the Commerce Department claims the report or recommendation is for national security, it is more likely to help President Trump in his trade industry aspiration. More specifically, to help President Trump have a bargaining chip as he continues his trade talks with Japan, China, and the European Union.
The auto industry is taking action to prevent the new tariffs through lobbying and coordinating “fly-ins,” bringing in dealers and top auto executives to argue their position at the Capitol. This aggressive measure is happening due to the amount of damage 25 percent import tariffs could have on the auto industry; encompassing a steep increase in vehicle expenses, and hundreds of thousands of job losses. A 2018 Center for Automotive Research study puts this damage into calculated amounts. It estimates an increase in new vehicle prices by $4,400, imported vehicle prices by $6, 875 and domestically-made vehicle prices by $2,270. The research study also provides the estimated number of jobs that will be lost, which is at more than 700,000.
In addition to the monetary damage, it can be assumed these tariffs would cause additional trade or business strains with other countries. The business relationships the U.S. auto industry has with other countries are already strained with the decline in auto sales, the rise in interest rates, the increase in vehicle transaction prices, and President Trump’s recently passed steel and aluminum tariffs. These 25 percent tariffs, metaphorically speaking, would only be fuel to the fire.
It is still uncertain whether or not the auto industry will succeed in its lobbying effort or if President Trump will pass the 25 percent tariff. According to section 232 Trump has until May 18 to make a decision. However, as stated by White House economic adviser Larry Kudlow, President Trump may take longer.