DETROIT — The National Automobile Dealers Association said Tuesday it "strongly supports" a new North American trade agreement, urging Congress to ratify it soon to prevent disruption to the auto industry.
In remarks to the Automotive Press Association here, 2019 NADA Chairman Charlie Gilchrist called the negotiated United States-Mexico-Canada Agreement a "win" for the industry that "will maintain auto production and distribution in North America."
"It will preserve the global competitiveness of the U.S. automotive industry," said Gilchrist, according to prepared remarks. "And it will enable dealers to continue providing affordable vehicle options for American consumers. But it will do more than that. Approval of USMCA will reduce the threat of tariffs on vehicles and parts by exempting those produced in North America. That is a big deal."
NADA called on Congress to move quickly to adopt the deal that would replace the North American Free Trade Agreement, which has guided trade among the three countries since the 1990s.
Mexico has ratified the deal. Vice President Mike Pence, in an op-ed this week, wrote that Canada is "ready to move as soon as we do."
President Donald Trump has suggested that House Democrats' impeachment inquiry into his presidency could delay congressional action on USMCA.
Yet NADA CEO Peter Welch told Automotive News on Tuesday he anticipates that legislation to implement the agreement could reach Congress this month, with a vote in the House possible by Thanksgiving.
In his remarks, Gilchrist, who represents franchised dealers in northern Texas on NADA's board, said trade and tariffs were not on his list of headwinds facing U.S. dealers when he was elected NADA's vice chairman two years ago. Plenty of other issues were: new-vehicle sales pressure, more stringent fuel economy standards, parts shortages spurred by manufacturer recalls, unpopular automaker stair-step incentives, an aging work force and a small pipeline of service technicians to replace those nearing retirement.
Gilchrist said he thinks the trade upheaval is an attempt by the Trump administration to address declining U.S. manufacturing jobs, the country's trade deficit and an imbalance in its relationships with trading partners.
In May, the administration lifted tariffs of 25 per cent on steel and 10 per cent on aluminum that were imposed on Mexico and Canada, which created a path forward for the countries on USMCA. But the president is considering imposing 25 per cent tariffs on autos and auto parts under national security concerns, which has the industry concerned.
Gilchrist said Tuesday that such a tariff would raise prices for consumers, leading to a cascading effect of fewer sales and job cuts. The Center for Automotive Research in Ann Arbor, Mich., estimated in a 2018 briefing for NADA that tariffs at 25 per cent could lead to as many as 117,500 fewer jobs at new-car dealerships.
"That's untenable and unacceptable. And I don't think for a second that President Trump wants that," Gilchrist said.
The auto industry's global supply chain has benefited from trade deals that enable parts to ship around the world without tariffs, he said. That, in turn, has made the American auto industry — both domestic brands and international automakers that assemble vehicles in the U.S. — more competitive, he added, leading to more affordable choices for consumers.
Gilchrist highlighted the importance of Canada and Mexico to the U.S. auto industry, noting the region's dominance in parts and vehicle production globally and the fact that a sizable share of new vehicles sold in the U.S. are sourced from its northern and southern neighbors.
"We cannot escape, nor should we try to undo, the reality that the U.S. auto industry is built on a favorable trading relationship with our two biggest trading partners — Canada and Mexico," he said.
"This is why I think President Trump is unfairly accused of not understanding the U.S. auto industry. I think the president understands the U.S. auto industry perfectly. Because what is one of his highest trade priorities? Renegotiating and strengthening NAFTA for the 21st century."