President Donald Trump’s threat to slap heavy tariffs on imported cars and parts may cost hundreds of thousands of American jobs and raise auto prices in the U.S. by roughly 10 percent, economists estimate. Echoing their dire predictions are companies, industry groups, global trading partners and even local city governments in comments about the proposal they’ve submitted to the U.S. Commerce Department.
Companies from General Motors (GM) and BMW to governments including the European Union and city of Birmingham, Alabama, warned of job losses in their comments to the Commerce Department, which is investigating possible effects of the proposed tariffs. The U.S. Chamber of Commerce said such tariffs “would deal a staggering blow to the very industry it purports to protect and risk igniting a global trade war.”
GM on Friday warned the tariffs might lead to a “smaller GM” and fewer jobs. The EU is preparing massive counter-tariffs on as much as $300 billion of U.S. goods, equal to the proposed $330 billion in U.S. tariffs on imports of autos and parts, the Financial Times reported, citing a letter to the Commerce Department. Japan made a similar objection, according to Bloomberg. Birmingham, Alabama, located an hour west of a major Honda assembly plant, warned that its economy would take a major hit should the proposed tariffs of 25 percent get imposed.
The United Autoworkers Union said it welcomed the Commerce Department’s investigation, but it cautioned that careful action is needed at its conclusion, in part because the auto industry is so intertwined globally. The union said Canada shouldn’t be held in the same light as some other trading partners in part because it doesn’t exploit workers.
Mr. Trump doesn’t appear to be moved. “You know, the cars are the big one. We can talk steel, we talk everything. The big thing is the cars,” he said in an interview with Fox’s Maria Bartiromo on July 1. Mr. Trump also said he’s pushing back the North American Free Trade Agreement negotiations until after the midterm elections in November.
At the initial June 29 deadline for comments on the proposed tariffs, 2,159 were submitted, according to the Commerce Department’s website. Hearings are scheduled July 19 and 20.
Here’s a sampling of what Commerce is hearing:
Automakers
GM June 29 warned the tariffs may cause it to shrink and cut jobs. BMW, Honda, Hyundai, Jaguar Land Rover, Kia, Mazda, Subaru, Toyota and Volvo were also among those that submitted comments.
BMW’s Spartanburg, South Carolina, plant employs more than 10,000 people. In its letter, the company said its operations lead to 36,285 jobs in the state. It noted the White House’s recently issued national security policy calls for “fair and free market principles and competition.” Most imported autos are made in Germany, Canada, Mexico, Japan and South Korea, BMW said, noting that all of them follow that edict.
“And yet, rather than engaging in ‘healthy competition’ with such ‘like-minded states,’ the United States has launched this 232 [national security] investigation to consider whether the competition from these nations so threatens the national security of the United States that a government economic intervention is justified,” BMW wrote. “We respectfully submit that the answer to that question is an unqualified no.”
Auto parts and suppliers
Parts makers’ comments echoed those of the vehicle makers. Magna International, which says it’s the biggest auto-parts maker in the U.S., employs 27,125 people in 11 states.
If tariffs, quotas or adjustments, are imposed, “it will irreversibly harm American businesses, workers, and consumers,” Magna wrote.
Lear, which supplies most automakers, said “ultimately the tariffs will result in increased vehicle prices and costs to consumers.” That means lower sales, production and employment that would “reduce rather than enhance US economic and national security.”
Supplier Mitsubishi wrote that the consequences of any decision to impose tariffs will be especially felt in local and regional economies, including “rural Kentucky and suburban areas of southwestern Ohio.”
Cities and states
Kansas Gov. Jeff Colyer, a Republican, noted in a letter to the Commerce Department that the industry brings in more than $1 billion in state tax revenue, employs about 60,000 Kansans and is home to international and U.S. auto facilities.
“While I understand the Administration’s desire to achieve a level playing field when it comes to international trade, I remain concerned about the continued growth of the automotive industry, a major economic contributor to Kansas and the nation,” Colyer wrote.
Officials in Birmingham, Alabama, said they’re “especially troubled” by a potential for tariffs on auto parts. The city’s statement noted that more than 200 suppliers feeding the assembly plants of Mercedes-Benz in Tuscaloosa and Hyundai in Montgomery employ 27,000 people.
“We grasp the Administration’s apprehensions about the balance of trade, but we are distressed by the significant negative effect on the automotive industry in Alabama and the tax revenue stream of the City of Birmingham were punitive tariffs to be placed on imported automotive parts.”
Unions
Unions were more supportive of the Commerce Department’s investigation. Yet they also cautioned the administration and Commerce Secretary Wilbur Ross to take a measured approach to actions in the auto industry.
The United Autoworkers Union called the investigation “long overdue.” But the UAW said the administration shouldn’t view the auto industry in isolation.
“The automotive industry is a global industry with long, complicated supply chains,” the union wrote. “We caution that any rash actions could have unforeseen consequences, including mass layoffs for American workers.”
Careful attention should be paid to how the industry works with the military, the UAW said, citing technologies like lithium-ion batteries, fuel cells and “autonomous mobility” products. The U.S. needs to be more competitive in markets where China and other trading partners dominate, like lithium-ion batteries.
The UAW also called for a targeted approach with U.S. with trading partners. Canada, it said, shouldn’t “be held in the same light as more egregious actors that use predatory trade practices to flood our domestic markets.”
The United Steelworkers union, like the UAW, “broadly supports” the investigation. It cited the market strategies of “large multinational corporations based in Japan, South Korea and Germany” as well as Mexican labor, wage and manufacturing as needing investigation. It also singled out “key products” that are part of China’s 2025 industrial goals should get examined.
The steelworkers union said Canada should be exempt from any actions and treated as a “trusted partner in securing our defense base, just as they did in World War II.”
Associations
The U.S. Chamber of Commerce, the country’s largest business trade association, “strongly opposes the imposition of tariffs on auto imports in the name of national security,” it said in its letter. “If this proposal is carried out, it would deal a staggering blow to the very industry it purports to protect and risk igniting a global trade war.”
Other associations submitting comments included the Alliance of Automobile Manufacturers, American International Automobile Dealers Association, Association of Equipment Manufacturers, Business Roundtable, Japan Automobile Manufacturers Association and the National Manufacturers Association.
