Published: Tue, July 03, 2018
Money | By Hannah Jacobs

USA automakers make case against Trump tariffs

USA automakers make case against Trump tariffs

Mazda Motor Corp. became the latest auto company to condemn the Trump administration's plans for potential vehicle import tariffs, saying such duties would hit both the industry as well as USA consumers.

Trump ordered an investigation of whether auto imports pose national security risks last month under a section of the same 1960s trade law used to impose levies on steel and aluminium.

"Increased import tariffs could lead to a smaller GM, a reduced presence at home and overseas for this iconic American company, and risk less - not more -", GM said in a submission to the U.S. Department of Commerce that was published Friday. In a filing with the Commerce Department, GM said that the tax would invite retaliation from other countries and drive up the cost of imported components, increase the cost of vehicles, and stifle demand.

"We believe the resulting impact of tariffs on imported vehicles and vehicle components will ultimately harm USA economic security and weaken our national security".

Commerce Secretary Wilbur Ross said the department had received 2,500 comments and expected more by Friday's deadline.

Toyota said Thursday that the Camry will cost $1,800 more to make if auto tariffs become a reality.

Some aides have said that Trump is pursuing the national security probe to put pressure on Canada and Mexico to agree to concessions in talks to renegotiate the North American Free Trade Agreement.

On June 6, the World Bank, in its latest Global Economic Prospects report, warned: "A broad-based increase in tariffs worldwide would have major adverse consequences for global trade and activity", the report said.

"Toyota shares the Administration's goals of increasing, growing the economy and strengthening national security", the automaker said.

The probe has raised alarm among manufacturers, parts suppliers and auto retailers because all major carmakers - including GM and Ford Motor - import a substantial share of the vehicles they sell in the U.S. from other countries. Flavio Volpe, the president of the Automotive Parts Manufacturers' Association, said the tariffs would cause "carmageddon" and see the industry "grind to an immediate halt".

In such a situation, GM said, it would either have to raise prices or move its manufacturing facilities.

If GM were to try to absorb the additional costs, it would have less money to invest in popular vehicles that sustain manufacturing jobs, or toward pivotal technologies including electric and self-driving cars.

Similarly, a third of Honda vehicles delivered in the USA throughout 2017 were built overseas.

Its comments echoed those from two major USA auto trade groups on Wednesday, when they warned that tariffs of up to 25 per cent on imported vehicles would cost hundreds of thousands of auto jobs, dramatically raise prices on vehicles and threaten industry spending on self-driving cars.

GM operates 47 US manufacturing facilities and employs about 110,000 people in the country.

Global automakers are warning the Trump administration of the "detrimental" effects of its proposed tariffs on imports of vehicles and automotive parts, with General Motors Corp. saying it could lead to job cuts and a diminished presence in the United States.

"America does not go to war in a Ford Fiesta", the group said. A third of Honda Motor Co.'s cars sold in the US past year were imported, mostly from Canada and Mexico, and 48 percent of Nissan Motor Co. cars sold in the country were brought from countries including Mexico, Japan and South Korea.

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