Proponents within the administration see auto tariffs as a way to force repatriation of supply chains and re-shoring of the parts manufacturing they argue has left the U.S. too dependent on countries such as China for key components.

That, they contend, is particularly important when it comes to nurturing emerging technologies such as electric vehicles that it’s already been protecting aggressively. Among the first wave of tariffs imposed on China last year were 25 percent duties on electric cars and buses, plus motors and other parts.

But the tariffs have also faced internal opposition within the Trump administration. U.S. Trade Representative Robert Lighthizer has been trying to delay a decision, arguing that rolling out the tariffs would scupper his attempt to close trade deals with the European Union and Japan, according to people familiar with internal discussions.

Production Costs

Economists argue that rather than strengthen the U.S. industry, tariffs would simply raise the cost of production and, in the long term, may push domestic carmakers to shift even more production offshore.

A 2018 study by the Peterson Institute for International Economics found that global retaliatory tariffs in response to a new 25 percent U.S. levy on autos and parts from all countries including Canada and Mexico would cause a bigger fall in U.S. exports than imports, reduce domestic production by almost 4 percent and lead to 624,000 U.S. job losses.

That’s in part because the auto parts business is increasingly global, with most vehicles produced in the U.S. assembled from components sourced from around the world.

General Motors Co., Ford Motor Co., Fiat Chrysler Automobiles NV, Tesla Inc. and Honda Motor Co. each imported less than 10 percent of the vehicles they sold in the U.S. last year from outside North America. They would suffer the least from vehicle tariffs and could be in a position to benefit from their rivals’ pain.

Still, the companies argue against steep levies, warning they would ravage U.S. payrolls, stifle domestic investment and raise new-car prices. “There would be no winners,” said Matt Blunt, president of the Washington-based American Automotive Policy Council, which lobbies on behalf of GM, Ford and Fiat Chrysler.

Trade used to be one of the few areas where the Detroit Three saw eye-to-eye with big labor. Today, the issue separates them.