No American industry is lobbying hard for them. Most economists think they’re a bad idea. Even some trade hawks in President Donald Trump’s administration see them as a roadblock in his overhaul of the global trading system.
That’s helps explain why tariffs on imported vehicles and auto parts -- the next possible salvo in Trump’s trade war -- are causing auto-parts supplier Michael Haughey to hold back on any major expansion right now.
“We’re not doing anything dramatic to really grow our business,” Haughey, president of Tennessee-based North American Stamping Group, said by phone. “We’re not hiring those extra people, we’re not growing and spending the extra capital money in anticipation that we might have to hunker down for a while.”
By Sunday, the Commerce Department will deliver to Trump the results of an investigation into whether the U.S. car imports stemming from the decades-long push toward a global automotive industry represent a threat to national security. Commerce Secretary Wilbur Ross can recommend options for the president, potentially leading to levies of as much 25 percent on imported vehicles and parts.
They’re tariffs hardly anyone seems to want.
“You cannot find a corner of this industry that thinks this is a good idea,” said John Bozzella, president of the Association of Global Automakers, the main group for overseas-based carmakers lobbying against new tariffs.
The automakers’ opposition stands in stark contrast with American steel producers and steelworker unions, whose calls for trade protections led to new levies on imports of the metals last year under the same trade powers Trump is using to examine autos.
Automakers, parts suppliers and economists predict dire consequences for the U.S. economy, in part because of the industry’s massive reach.
The auto industry makes up about 8 percent of global trade, compared with the slightly more than 3 percent represented by the bilateral trade between the U.S. and China, according to the World Trade Organization. The U.S. imported more than $191 billion in passenger cars and light trucks in 2017, the last full year of data available, and exported $56.9 billion worth. It imported almost $149 billion in parts and had exports valued at $86.6 billion.
The Trump administration argues that cars are a valid target for national-security tariffs because it sees “economic security” as a key element to safeguard the nation. It also points to the discrepancy in U.S. tariffs with the rest of the world. “Why is it that Europe gets to charge us 10 percent to try to sell them a Ford or a GM automobile and they get 2.5 percent? I mean, that’s insane,” White House trade adviser Peter Navarro said in November.