Auto Industry to Urge Commerce to Put Brakes on Tariffs

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By Rossella Brevetti

The Commerce Department July 19 will hear a host of industry voices insisting that it shelve proposed tariffs on imports of auto and auto parts.

Tariffs will raise prices, limit choice, and depress demand for new vehicles, the National Automobile Dealers Association and other auto groups plan to tell Commerce at the hearing.

Commerce is investigating whether imports of automobiles— including cars, SUVs, vans and light trucks, and automotive parts— affects U.S. national security. If a threat to national security is found, President Donald Trump may impose tariffs and/or quotas. The Commerce public hearing is part of the probe.

Opposition to the Commerce investigation is “widespread and deep” because tariffs trigger a domino effect that risks hurting American families and workers, along with the economy, the Alliance of Automobile Manufacturers will testify. “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,” according to a preview of the testimony.

On the eve of the hearing, a bipartisan group of 149 House lawmakers July 18 asked Commerce Secretary Wilbur Ross not to risk U.S. jobs and economic growth by imposing tariffs on automobiles and automotive parts.

The letter, led by Reps. Jackie Walorski (R-Ind.), Terri Sewell(D-Ala.), Mike Kelly (R-Pa.), and Ron Kind (D-Wis.), warned that tariffs on autos and auto parts could undermine U.S. economic security.

Commerce will consider information from the July 19 hearing and the more than 2,300 public comments submitted in making its recommendation to the president.

Overwhelming Opposition

Commerce received an overwhelming number of comments against the proposed tariffs, Les Glick of the law firm Butzel Long in Washington, whose clients include automobile parts suppliers, told Bloomberg Law. Alliance of Automobile Manufacturers spokeswoman Gloria Bergquist told Bloomberg Law that car manufacturers operating in the U.S. source parts from abroad.

“Everyone seems to be united” against the tariffs, Glick said.

The exception is labor unions, including the United Auto Workers, which will testify in favor of tariffs, he said. The UAW submission blames the U.S. trade deficit with Mexico for loss of U.S. auto industry jobs. “When a part comes from Mexico, it usually has about 35 percent U.S. content,” Glick said said. “They are really misguided in targeting Mexico on this,” he said.

Importation of motor vehicle parts is not a risk to U.S. national security, but tariffs risk economic security, jeopardizing supplier jobs and investments, according to a preview of testimony to be offered by Ann Wilson, senior vice president of the Motor & Equipment Manufacturers Association. MEMA represents more than 1,000 vehicle suppliers, which are the largest sector of manufacturing jobs in the U.S.

Unilateral import restrictions, whether tariffs or quotas, would be counterproductive and give an edge to foreign production at the expense of U.S. manufacturing, according to Linda Dempsey, National Association of Manufacturers vice president for international economic affairs.

Officials from Canada, the European Union, Japan, Malaysia, Mexico, South Africa, South Korea, and Turkey also will make the pitch that U.S. tariffs on autos and auto parts would hurt U.S. competitiveness. Tariffs intended to help the auto industry may well affect the industries’ overall competitiveness, according to a South Korean Embassy submission.

Industry Is United

Seven auto groups representing almost 10 million jobs in the U.S. July 17 joined a letter urging the White House to not impose higher tariffs on imported autos and auto parts.

The letter said the auto industry, domestic and international automobile manufacturers, suppliers, dealers, and auto care businesses are united in urging the administration to “achieve fair trade through policies that won’t jeopardize American jobs, our economy or U.S. technological leadership.”

A spike in auto tariffs would “leave less capital for investments in innovations and less competition to promote creative and beneficial technologies,” the letter said. Washington publications will include the letter as an ad in their July 18-19 issues. Digital ads will appear on media sites starting July 18, according to the groups.

The letter was signed by the Alliance of Automobile Manufacturers, American Automotive Policy Council, National Automobile Dealers Association, Auto Care Association, American International Automobile Association, Global Automakers, and the Motor & Equipment Manufacturers Association.

To contact the reporter on this story: Rossella Brevetti in Washington at rbrevetti@bloomberglaw.com

To contact the editor on this story: Jerome Ashton at jashton@bloomberglaw.com

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