The U.S. Commerce Department sought feedback on President Donald Trump's plans to consider taxing auto imports. It got an earful at an all-day hearing Thursday.
Critics lined up to urge the administration to reject auto tariffs. They argued that the taxes would raise car prices, squeeze automakers by increasing the cost of imported components and invite retaliation from U.S. trading partners — and allies — like Japan, the European Union and Canada.
Jennifer Thomas of the Alliance of Auto Manufacturers registered her organization's opposition to levies on car, truck and auto parts imports. She noted that "our view is shared by over 2,200 comments that were filed before this hearing. In fact, we were only able to find three organizations" in favor of pursuing the tariffs.
Trump has ordered Commerce to investigate whether auto imports pose a threat to U.S. national security that would justify tariffs or other trade restrictions. Earlier this year, he used national security as a justification for taxing imported steel and aluminum.
Auto tariffs would escalate global trade tension dramatically: The U.S. last year imported $192 billion in vehicles and $143 billion in auto parts — figures that dwarf last year's $29 billion in steel and $23 billion in aluminum imports. Not to mention the $34 billion in Chinese goods the administration has so far hit with tariffs in yet another dispute over the predatory practices China deploys in a push to challenge U.S. high-tech dominance.
Nearly 98 percent of the cars and trucks that would be hit by the tariffs are imported from U.S. allies: the EU, Canada, Japan, Mexico and South Korea, according to the Peterson Institute for International Economics. David O'Sullivan, the EU's ambassador to Washington, said it was "absurd" to think that imports from staunch allies undermine America's national defense.
"The importation of automobiles and auto parts from Japan has not by any means threatened to impair the national security of the United States, and will never do so in the future," said Kazutoshi Aikawa, deputy chief of mission at the Japanese Embassy in Washington, Kyodo news reported.
Aikawa argued that the growth of the U.S. automotive manufacturing base owes much to the globalization of the industry and its value chain. He also stressed contributions by Japanese auto and auto-related companies in creating more than 1.5 million U.S. jobs and spurring the growth of the U.S. manufacturing base through investment totaling $48 billion.
The Japanese diplomat said new auto tariffs, if invoked, would significantly affect U.S. consumers and carmakers alike, citing data that the imposition of 25 percent tariffs would increase the price of a $30,000 imported car by $6,400, Kyodo reported.
In a study out Thursday, the Center for Automotive Research found that a 25 percent tariff on autos and parts would cut U.S. auto sales by 2 million and wipe out 714,700 jobs. It would also raise the price of the typical new car sold in the United States (now about $35,000) by $4,400 — $2,270 for U.S.-built cars and $6,875 for imported cars and trucks.
"New tariffs or quotas would also reduce competition and consumer choice; increase the cost of used vehicles; and raise the cost of getting vehicles serviced and repaired," said Peter Welch, president of the National Automobile Dealers Association, which commissioned the study.
Welch said the tariffs would push the average new-car payment to $611 a month from $533 a month (over 69 months on average).
John Hall, a maintenance worker at the Hyundai Motor Manufacturing plant in Montgomery, Alabama, testified that auto imports pose no threat to U.S. national security. "In fact, it's just the opposite," he said. Hyundai imports parts that go into its Alabama-built cars.
"New tariffs on automotive imports would have a devastating effect," Hall said. "I am one of thousands of American workers whose livelihoods would be put at risk by a substantial tariff on automotive goods. It would not be possible to change our supply chain overnight, and a 25 percent tariff on parts would raise production costs at our Alabama factory by about 10 percent annually."
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