Peter Welch sees President Donald Trump’s attempt to balance the playing field for American companies doing business abroad in the automobile industry as a good plan gone awry.
“(The) National Automobile Dealers Association (NADA) fully appreciates the administration’s desire to address these imbalances, but we object to the tools being considered by the administration to achieve these goals," Welch, president and CEO of that organization, said in a press release. “That’s because tariffs or the imposition of import quotas are blunt instruments that fail to account for the reality of today’s globalized auto industry.”
In late May, the Trump administration moved to impose a 25 percent tariff on all imported steel and a 10 percent tariff on imported aluminum, with the possibility of also attaching a tax the size of the steel tariff on all foreign autos and parts.
Suddenly three straight years of new-vehicle sales surpassing 17 million seemed like a distant memory to those in the industry.
“It was in this context that an alarm went off when the Trump administration announced plans to impose tariffs of as much as 25 percent on imported automobiles and automotive parts, threatening higher vehicle prices and reduced choices for the American auto-buying public,” Welch added. Higher vehicle prices and reduced choices could reduce consumer demand and throw into reverse the economic gears that have been driving new-vehicle sales forward.”
Among other things, Welch argues that over time tariffs lead to higher new-vehicle prices, loss of industry jobs and decreased competition, all factors that inevitably make life harder on consumers.
“The tax and regulatory policies of this administration have renewed business and consumer confidence, and a healthier auto industry pays countless economic dividends at the local, state and national levels,” Welch added. “We see that every day in our communities. As dealers, we are optimistic that the Trump administration can achieve similarly beneficial trade policies without imposing the serious risks that come with auto tariffs. In the coming weeks and months at NADA, we will do everything we can to help make that happen.”
The Petersen Institute for International Economics estimates that a 25 percent tariff on foreign vehicles could make up to a 5 percent dent in employment, costing as many as 600,000 jobs. Meanwhile, prices could be headed in the other direction with increases of roughly $2,000 for compact vehicles and $7,000 for certain SUVs.
According to Yahoo Finance, the uncertainty surrounding vehicle tariffs has led to a 2019 forecast that vehicle demand, both domestically and abroad, is expected to decline, with the now nearly month-long partial government shutdown doing little to stem the tide.