WASHINGTON -- The trade association representing international automakers operating in the United States said Wednesday that imposing tariffs on imports of vehicles and parts for national security reasons would harm the auto industry by raising prices, lowering demand and inviting retaliation from trading partners.
The group predicted significant job losses in the United States.
President Donald Trump has long complained about the U.S. trade deficit in automobiles, especially criticizing Germany and the European Union, and instructed his administration to investigate whether any action is needed to correct the imbalance. He has floated the possibility of a 25 per cent import tax.
“America does not go to war in a Ford Fiesta,” Association of Global Automakers President John Bozzella said in a conference call with reporters. “There is no national security justification for taxing imports of vehicles and parts or discriminating between global companies headquartered here or in allied countries. Every U.S. production facility in the industry could be made available in a national emergency, and the 130,000 Americans who work directly for international automakers are no less patriotic or willing to serve their country in a time of crisis than any other American.”
“If this investigation leads to tariffs, retaliation against U.S. exports is inevitable,” Bozzella added. Substantial tariffs against major US auto exports have in fact already been announced, placing American auto workers on the front lines of this trade conflict.”
The Trump administration is investigating whether auto imports are a national security threat under authority in the Trade Expansion Act of 1962 that has only been invoked on two occasions -- only one of which resulted in any trade action before the Trump administration.
Most trade experts and economists say using national security as a pretext for protectionism opens the door for other countries to circumvent World Trade Organization rules and claim sovereign rights to impose tariffs based on defence needs.
Bozzella noted that the U.S. auto industry is thriving, with near record levels of production, sales and exports, and isn’t seeking government help against imports.
The Association of Global Automakers noted in the filing that all 14 automakers producing vehicles in America -- including homegrown Ford Motor Co., General Motors and Fiat Chrysler Automobiles -- import vehicles, accounting for 44 per cent of U.S. sales. Of these, half are imported from free-trade partners Canada and Mexico, and those vehicles incorporate significant U.S. content.
The Alliance of Automobile Manufacturers, whose members include many that belong to the Association of Global Automakers as well as the Detroit Three, also filed comments warning that 25 per cent tariffs would add about US$5,800 to the price of a vehicle and collectively cost consumers US$45 billion per year.
The alliance usually focuses on safety and environmental issues related to autos, leaving trade issues to the Automotive Policy Council, representing companies with domestic headquarters, or the Association of Global Automakers. Its involvement suggests that the domestic and international automakers are on the same page, given that the tariffs would also apply to equally to Buick's imports from China and BMW's from Germany, and because all manufacturers import parts for vehicles assembled in the United States.