The Alliance released this statement as we filed comments to respond to the Commerce Department Section 232 National Security Investigation of Imports of Automobiles and Automotive Parts:
“While we understand that the Administration is working to achieve a level playing field, tariffs are not the right approach. Tariffs on autos and auto parts raise vehicle prices for all customers, limit consumer choice and invite retaliatory action by our trading partners. Automakers support reducing trade barriers across the board and achieving fairness through facilitating rather than inhibiting trade.
“Domestic and international automakers build autos in 45 facilities in 14 states and support more than 7 million jobs across the U.S. We believe that the economic security of the auto industry and country would be strengthened through modernizing NAFTA to grow U.S. manufacturing and jobs, concluding a U.S.-EU Trade Pact to address trade barriers on both sides of the Atlantic and seeking other opportunities to expand market access for U.S. auto exports.”
How Import Tariffs Could Harm American Families and Workers
$45 Billion Tax on Consumers: Buyers of imported vehicles would face an average price increase of $5,800 from a 25-percent import tariff, according to an analysis of U.S. Department of Commerce data. Nationwide, this tariff would hit American consumers with a tax of nearly $45 billion, based on 2017 auto sales. Not included in this figure are costs from tariffs on auto components. Consumers would also face higher costs from tariffs on imported auto parts when buying vehicles from both domestic and international automakers. (Potential consumer impacts on a state-by-state basis are attached to our comments.)
Substantial Job Losses: A 25-percent tariff on imported vehicles and vehicle components would result in a 1.5 percent decline in production and cause 195,000 U.S. workers to lose jobs over a 1- to 3-year period or possibly longer, according to the Peterson Institute for International Economics. Their analysis estimates that if other countries retaliate with tariffs, then American job losses would likely increase to 624,000.
Declining Auto Sales of 1-2 Million Units: The leading automotive research firm LMC Automotive projects a 25-percent tariff on imported vehicles would reduce annual sales by 1-2 million units, depending on how tariffs are passed on to consumers.
Cancel out Tax Reform Benefits: The Tax Foundation found that “If imposed, these automobile tariffs would fall more on middle- and lower-income taxpayers, reducing the increase in income these households would see because of the Tax Cuts and Jobs Act, and making the distribution of the tax burden less progressive.”
Reduce Auto Exports: Last year, more than $99 billion of autos and autos parts were shipped from U.S. ports to more than 88 countries. Retaliatory tariffs would restrict access to other international markets, depress exports of autos and their parts and threaten the industry’s competitiveness in today’s global market.
Harm other Vital Sectors of our Economy: Imposing tariffs on imported autos and auto parts would significantly expand the U.S. economy’s “trade war” exposure. The U.S. imported over $270 billion worth of finished autos and auto parts in 2016. A tit-for-tat trade war, like the U.S. is now experiencing on steel and aluminum ($46 billion in imports) and Chinese goods ($50 billion in imports), would nearly triple U.S. exports potentially exposed to retaliatory tariffs. Importantly, nearly $160 billion worth of anticipated retaliatory tariffs would fall on non-automotive U.S. goods.
Cede U.S. Leadership on Future Vehicle Technologies: We are engaged in a global race to lead on the next generation of cutting-edge vehicle technologies, like automation and electrification. Tariffs on imported vehicles and their components would mean less capital for automakers to invest in these technologies, and thereby disrupt U.S. leadership in the development of future innovations that promise so many benefits.