On July 19th, the Department of Commerce will hold a hearing on whether automobiles and their parts threaten national security, as part of the White House’s deliberation on raising tariffs on imports. Here is the testimony to be delivered by the Alliance, for immediate release.
Good morning, I am Jennifer Thomas, Vice President of Federal Government Affairs at the Alliance of Automobile Manufacturers. The Alliance is a trade association representing 12 automakers – both domestic and international nameplates. Together, Alliance members represent approximately 70% of new car sales in the U.S.
Thank you for the opportunity to express our views on this critical issue. Let me start by dispelling the notion that autos threaten national security.
Americans have always had a love affair with cars. Buying a new vehicle is such a common aspiration that it is part of the American dream. Getting a driver’s license is a rite of passage, and we all remember our first car. In fact, autos and their manufacturers are part of the very fabric of America.
America’s auto industry is one of the most powerful engines driving our economy, through investments in everything from jobs and facilities to training and R&D. On 9/11, one of our darkest days, the companies that I represent immediately responded with donations of vehicles and charitable contributions.
Sadly, there is a long list of products that are largely no longer made in the U.S., including TVs, laptops, cellphones, baseballs, and commercial ships. But millions of autos are proudly made here, and our footprint continues to grow.
There are 14 domestic and international automakers operating 45 assembly plants in 14 states. Automakers support more than 7 million American workers with $500 billion in annual paychecks and generate $200 billion in federal and state taxes. The industry contributes 3.5% to America’s GDP. Automakers in the U.S. invest more than $20 billion in annual R&D and are transforming mobility by investing heavily in automation and electrification.
I’m here today to reiterate our strong opposition to this unprecedented, unwarranted investigation and the potential imposition of higher tariffs on imported autos and auto parts.
We appreciate the desire to strengthen our trade agreements to better achieve a level playing field in the global marketplace, but tariffs are the wrong approach.
Our view is shared by over 2,200 comments filed before this hearing. In fact, we only found 3 organizations supporting this inquiry.
The opposition to this investigation is widespread and deep because the damaging consequences are alarming. Higher auto tariffs will harm American families and workers, along with the economy.
Simply put, auto tariffs are a massive tax on consumers. Industry analyses show that a 25% tariff would raise the price of an imported car nearly $6,000 and the price of a U.S.-built car $2,000.
This would equate to an $83 billion tax on U.S. consumers that would trigger a domino effect on the industry and economy. When vehicle prices rise, demand drops. Lower demand means less production.
And when production declines, job losses follow. A Peterson Institute analysis projects a job loss of about 200,000, and if other countries retaliate with tariffs, American job losses would reach more than 600,000 – that’s almost 10% of auto jobs in this country.
Tariffs will also strike at the heart of American technological leadership by chilling R&D investments in emerging innovations. Today, the U.S. is a leader in the global race to develop automation and electrification. If auto tariffs raise costs and stall investments, the U.S. may well lose that leadership, since other countries are already chasing automakers to build R&D facilities overseas.
Trade retaliation would further threaten U.S. auto exports. Last year, about $100 billion in autos and auto parts were shipped from our ports to more than 88 countries. Retaliatory tariffs would restrict access to international markets, depress auto exports, reduce jobs, and threaten the industry’s competitiveness in today’s global market.
Speaking of competition in the global market, we understand that the agency has sent detailed questionnaires to automakers regarding production. Companies are working on responding, but it is challenging due to the highly sensitive information requested. We urge the Administration to take critical precautions to ensure this competitive business information remains secure and confidential.
In closing, automakers support the Administration’s efforts to level the playing field and strengthen our trade agreements to grow American jobs.
We respectfully contend there are better ways than raising tariffs. Our economic security could be strengthened through modernizing NAFTA to grow U.S. manufacturing and jobs. We support 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.
This is the winning formula for continuing the economic success that this Administration has reignited and we look forward to partnering with you on our shared goals.