Trump Urged to Drop Tariff Threat on Imported Autos and Auto Parts

March 27, 2019 by Dan McCue
People check out a 2018 Maserati Levante S Granlusso during the Gallery held at Cobo Center in downtown Detroit on January 13, 2018. (Junfu Han/Detroit Free Press/TNS)

Nine members of the New Democrat Coalition, led by vice chairs Representatives Terri Sewell, D-Ala., and Suzan DelBene, D-Wash., sent a letter to President Donald Trump Wednesday, urging him to abandon his threat to impose sweeping new tariffs on auto imports.

Since last year, Trump has repeatedly threatened to target the European Union with auto tariffs as he’s grown increasingly frustrated by negotiations for a bilateral trade deal with the European Union.

The sticking point is reported to be intractable differences over agricultural products.

Trump has set a deadline of mid-May to decide whether to impose the trade restrictions or not. He has said his decision would hinge on how talks with the EU proceed.

In February, according to CNN, Trump received a report from the Commerce Department about using the Cold War-era provision related to national security in Section 232 of the Trade Expansion Act to impose tariffs on auto imports.

The report has so far been kept secret, frustrating members of Congress who have pushed back on the threatened tariffs.

Last week, however, Fox Business Network’s Maria Bartiromo decided to press the president on his response to the report, asking him if he did indeed consider auto and auto part imports a national security threat.

“Well, no,” Trump responded. “What poses a national security risk is our balance sheet.”

In their Wednesday letter to the president, the centrist, capitalist Democrats said in their view, “[i]mposing tariffs under Section 232 on autos and auto parts for reasons not related to national security concerns clearly oversteps the authority granted by Congress.”

“Mr. President, we strongly urge you to act in accordance with your March 22 public statement and abandon any further action that threatens the American automotive sector, auto workers, and our economy,” the coalition members said.

The representatives go on to say they are confident that imported automobiles and automotive parts are do not impair national security, and that based on Trump’s interview with Bartiromo, the group says it’s pleased “we are in agreement that no national security threat exists.”

The letter also warns the president that “any attempt to impose tariffs on these products will directly harm our hard-working American workers and companies, and the economy as a whole.”

In addition to Sewell and DelBene, the letter was signed by Representatives Ron Kind, D-Wis., Rick Larsen, D-Wash., Greg Meeks, D-N.Y., Lizzie Fletcher, D-Texas, Susan Davis, D-Calif., Donald Beyer, D-Va., and Stephanie Murphy, D-Fla.

The Center for Automotive Research, an independent, non-profit, research organization, has said tariffs and quotas on automobile and parts imports could cause new car prices to increase by $4,400 on average – with the price of even U.S.-built vehicles climbing as much as $2,270 due to the current share of imported parts used in them.

In a briefing prepared for the National Automobile Dealers Association, the center estimated that imported vehicle prices could increase as much as $6,875 if the threatened tariffs are imposed.

The analysis went on to say that rather than help the U.S. automotive and parts industries, a 25 percent tariff on automotive and parts imports could lead to up to 2 million fewer light vehicle sales at dealerships across the nation, 714,700 fewer domestic auto industry  jobs, and a $59.2 billion reduction in U.S. economic output.

U.S. new automobile dealerships could lose as many as 117,500 jobs and $66.5 billion in revenue, the center said.

“Tariffs and quotas on automobiles and automotive parts will not strengthen the U.S. economy or make U.S. automakers and suppliers more competitive in the global market,” said Carla Bailo, CEO and president of the center. “Prices will rise for U.S. consumers – even if they buy a U.S.-built vehicle – due to the share of imported parts content used in U.S. production.”

After reviewing the center’s numbers, Peter Welch, president and CEO of the National Automobile Dealers Association, said “this analysis confirms that broad Section 232 tariffs on autos and auto parts still present the biggest trade-policy threat to consumers and the U.S. economy.

“NADA understands and appreciates the Administration’s attempts to level the trade playing field and eliminate unfair trade practices, but expansive Section 232 auto tariffs are the wrong tool for the job because they will lead to dramatic price increases, depressed vehicle sales and job losses,” he said.

Welch, who testified on the subject of tariffs before the Commerce Department in July 2018, encouraged the Administration to avoid imposing broad-based tariffs on autos and auto parts.

“We should continue to work together to address genuine trade concerns, but without hurting American consumers and small businesses in the process,” he said.

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