Feb 19, 2019 by Auto Remarketing Staff | Auto Remarketing
CARY, N.C. – Dealer organizations are becoming even more roiled over what’s unfolding in Washington, D.C., regarding whether imported autos and auto parts represent a national security threat.
Even after taking into account the mitigating effects of the new United States Mexico Canada Agreement (USMCA), the National Automobile Dealers Association said tariffs on autos and auto parts under Section 232 of the Trade Expansion Act of 1962 would still be extremely detrimental to consumers and the U.S. economy and cause significant vehicle-price increases and job losses, according to research by the Center for Automotive Research (CAR).
American International Automobile Dealers Association president and chief executive officer Cody Lusk then issued a strong statement on Tuesday in response to the Department of Commerce’s investigation into the matter.
“Late last night, after nine months of waiting, the Department of Commerce finally submitted to the White House its findings on whether imported autos and auto parts constitute a national security threat to the United States,” Lusk said. “Unfortunately, the report has not been made public, highlighting, once again, the bogus nature of this investigation into America’s 9,600 international nameplate dealership franchises, their 578,000 American employees and millions of customers.
“Now, dealerships must continue to operate under a cloud of uncertainty, not knowing if at any moment their products will be slapped with 25 percent tariffs, raising vehicle and repair costs by thousands of dollars and slashing sales,” Lusk continued. “Dealers, their employees and the communities they serve are being treated like pawns by their government. AIADA urges both President Trump and the Department of Commerce to come forward and unequivocally confirm what we already know: imported autos and auto parts are not a national security threat.”
In July, Lusk testified in support of the international auto retail industry during the U.S. Commerce Department’s 232 National Security Investigation Hearing. His comments focused on the 578,000 jobs provided by America’s 9,600 international nameplate auto dealers in their communities, the vehicles they sell to consumers, the billions in state and local taxes they generate, and how they and their customers would be negatively impacted by new vehicle tariffs.
NADA also was involved in that July proceeding, and late last week that organization reiterated what it presented to policymakers along with new information.
NADA pointed out that CAR found that across-the-board tariffs on autos and auto parts would lead to substantial increases in the price of all new vehicles sold in the U.S. — along with significant decreases in both annual new-car sales and auto industry jobs. CAR’s latest analysis provideed 10 scenarios based on different combinations of U.S. trade policies and deals including:
— Section 232 autos and auto parts tariffs
— The USMCA as of Jan. 21
— Section 301 tariffs on Chinese imports
— Current Section 232 steel and aluminum tariffs
If the USMCA is implemented in its current form, other tariffs continue unmodified, and the Section 232 auto and auto parts tariffs are imposed — even with exemptions for Canada, Mexico and South Korea — CAR estimated that:
— As many as 366,900 U.S. jobs will be lost, including as many as 77,000 franchised dealership jobs.
— U.S. light-duty vehicle prices will increase by $2,750 on average.
— U.S. new light-duty vehicle sales will drop by up to 1.3 million units per year.
— Many consumers will be forced into the used-vehicle market.
— The cost of maintaining and repairing vehicles will go up.
In fact, NADA emphasized that CAR found that broad-based Section 232 autos and auto parts tariffs would still be responsible for more than 90 percent of the total economic harm caused by implementation of the collective trade policies currently being pursued.
“This analysis confirms that broad Section 232 tariffs on autos and auto parts still present the biggest trade-policy threat to consumers and the U.S. economy,” NADA president and CEO Peter Welch said. “NADA understands and appreciates the administration’s attempts to level the trade playing field and eliminate unfair trade practices, but expansive Section 232 auto tariffs are the wrong tool for the job, because they will lead to dramatic price increases, depressed vehicle sales and job losses.”
Welch, who testified on the topic last July before the Department of Commerce, again encouraged the administration to avoid imposing broad-based tariffs on autos and auto parts.
“We should continue to work together to address genuine trade concerns, but without hurting American consumers and small businesses in the process,” Welch added.
Beyond the dealer organizations, the developments are frustrating the Association of Global Automakers, a trade association based in Washington, D.C., that represents the U.S. operations of international automakers, original equipment suppliers and other automotive-related companies and trade associations.
“If it is going to be the policy of the U.S. government that the price of autos and auto parts should increase by as much as 25 percent because of new tariffs, the American public deserves to know that as soon as possible. Full and rapid disclosure will allow American consumers, auto industry stakeholders and Congress to debate the merits of the policy and take actions as needed,” said John Bozzella, president and CEO of Global Automakers.
“On the other hand, if the persistent reports that the Commerce Department’s investigation into auto trade will recommend tariffs of 25 percent are in fact wrong, then the American public should also know that as soon as possible,” Bozzella continued.
“The prolonged uncertainty about these tariffs freezes investment decisions, makes planning for the U.S.-Mexico-Canada Agreement next to impossible and does incalculable damage to the U.S. auto industry,” he went on to say.
“Automotive trade does not imperil national security. It strengthens our competitiveness and benefits consumers. There is no compelling need to hide the recommendations made to the president, or to restrict trade in a sector that supports the jobs of 10 million Americans,” Bozzella concluded.
