Two major auto trade groups warned the administration of US President Donald Trump that imposing up to 25 percent tariffs on imported vehicles would cost hundreds of thousands of auto jobs, dramatically hike prices on vehicles and threaten industry spending on self-driving cars, Reuters reports.
A coalition representing major foreign automakers including Toyota Motor Corp., Volkswagen AG, BMW AG, and Hyundai Motor Co., said the tariffs would harm automakers and US consumers.
The administration in May launched an investigation into whether imported vehicles pose a national security threat and Trump has repeatedly threatened to quickly impose tariffs.
“The greatest threat to the US automotive industry at this time is the possibility the administration will impose duties on imports in connection with this investigation,” wrote the Association of Global Automakers representing major foreign automakers.
“Such duties would raise prices for American consumers, limit their choices, and suppress sales and US production of vehicles.”
The group added: “Rather than creating jobs, these tariffs would result in the loss of hundreds of thousands of American jobs producing and selling cars, SUVs, trucks and auto parts.”
On Friday Trump threatened to impose a 20 percent tariff on all imports of EU-assembled cars. On Tuesday Trump said tariffs are coming soon.
“We are finishing our study of Tariffs on cars from the EU in that they have long taken advantage of the US in the form of Trade Barriers and Tariffs. In the end it will all even out – and it won’t take very long!” Trump tweeted.
The Alliance of Automobile Manufacturers, representing General Motors Co., Ford Motor Co., Daimler AG, Toyota and others, urged the administration in separate comments filed Wednesday not to go forward.
“We believe the resulting impact of tariffs on imported vehicles and vehicle components will ultimately harm US economic security and weaken our national security,” the group wrote, calling the tariffs a “mistake”.
Imposing them “could very well set a dangerous precedent that other nations could use to protect their local market from foreign competition”, it added.
The Alliance said its analysis of 2017 auto sales data showed a 25 percent tariff on imported vehicles would result in an average price increase of US$5,800, which would boost costs to American consumers by nearly US$45 billion annually.
Automakers are concerned tariffs would mean less capital to spend on self-driving cars and electric vehicles.
“We are already in the midst of an intense global race to lead on electrification and automation. The increased costs associated with the proposed tariffs may result in diminishing the US’ competitiveness in developing these advanced technologies,” the Alliance wrote.
Toyota said in a statement Wednesday that new tariffs “would increase the cost of every vehicle sold in the country”. The automaker said the tariffs would mean even a Toyota Camry built in Kentucky “would face US$1,800 in increased costs”.
Both automotive trade groups cited a study by the Peterson Institute for International Economics that the cost to US jobs from the import duties would be 195,000 jobs and could be as high as 624,000 jobs if other countries retaliate.
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