A report given to President Trump by the U.S. Commerce Department could lead to increased tariffs. These tariffs could directly effect imported cars and auto parts, creating a massive loss for the auto industry.
The report is just one of the many recent hits the auto industry has had to deal with after obstacles of low sales, China’s tariffs on auto parts and Trump’s tariffs on steel and aluminum.
The report is the conclusion of an investigation that began in May 2018. This investigation, also known as the Section 232 investigation, was done at the request of the President to understand national security and how imports impacted it. The Commerce Department implied that the investigation was also to concentrate on vehicle technology. However, the overarching goal was more likely to help with President Trump and his aspirations in the trade industry. Administration officials say the potential tariffs could be a way to win concessions in Japan and the EU. The president states that tariffs protect the industry and also help win trade agreements.
While details of the report are unknown, President Trump has 90 days to decide on the incorporated recommendations. Auto industry officials suspect these recommendations to involve tariffs on manufactured vehicles or technology or areas related to electric, automated, connected and shared vehicles.
Automakers and part suppliers believe these recommendations to involve wide-ranging tariffs of 20 to 25 percent on cars and parts, or more restrictive tariffs concerning areas related to electric, automated, connected and shared vehicles.
Since its submission, the auto industry has worked hard to combat the report in a full-fledged campaign. In this campaign, the industry stresses just how much damage such tariffs could do to the industry; including a steep increase of thousands of dollars in vehicle costs and possibly hundreds of thousands rise in job losses if the tariff is at 25 percent. The Motor and Equipment Manufacturers Association adds to the industry’s sentiment as they warn about the tariffs affecting the amount of investment in the United States; encouraging more offshore production.
The Center for Automotive Research puts the fears of the auto industry into light when they detail a worst-case scenario in which a tariff of 25 percent would end in a loss of 366, 900 jobs. Think Tank does something similar when they say, U.S. light duty vehicle prices would increase by $2,750 on average, including U.S.-built vehicles, reducing annual U.S. sales by 1.3 million units and forcing many consumers to the used car market.