Wednesday, July 4, 2018

Industry group says car-care business owners, employees should be very afraid of Trump administration’s proposed tariffs.

U.S. autoworkers build Hyundais on an Alabama assembly line.
U.S. workers build cars at Hyundai Motor Manufacturing, LLC.
Photo: Hyundai Media Center.
If you’re an employee or business owner in the U.S. car-care industry, the Auto Care Association thinks you should be afraid. Very afraid.

According to the trade group, based in Bethesda, Maryland, an economic study they commissioned finds that proposed tariffs of 25 percent on imported automobiles and car parts could cost the auto parts manufacturing sector 17,800 jobs, resulting in wage losses of $1.4 billion for affected workers.

In comments submitted June 29 to the U.S. Department of Commerce, the association contended that “the availability of affordable high-quality parts from foreign sources creates thousands of jobs that might be threatened should the Trump administration move forward with a tariff on vehicles and vehicle parts.”

The study also projects the loss of 6,800 jobs in automotive repair shops and 85,200 jobs in the in the wholesale and retail auto care segments—a result of expected reduced demand as an unintended consequence of tariff-driven price increases.

Like many critics of tariffs in general, the Auto Care Association points to a global nature of today’s industries, including the automotive industry, arguing that “goods are rarely designed, manufactured and consumed in one country,” and that imports “help companies lower costs and improve product quality, allowing them to remain competitive domestically and export globally.”

The group’s study also estimates that tariffs would escalate the cost of car ownership by over $700 per household per year.

While the Trump administration’s proposals come from what purports to be a conservative, pro-business platform, arguments against tariffs have a long history among advocates for laissez-faire, free-market capitalism. For example, disciples of Ayn Rand, the ultra-advocate for laissez-faire economics, have long argued that “buy American is un-American.” Among those who have made this case is philosopher and longtime Ayn Rand associate Harry Binswanger.

Further, in direct response to Trump administration tariff proposals, the Mises Institute, an organization inspired by the teachings of Austrian economist Ludwig von Mises, warned in an essay published March 3 that tariffs, rather than protecting American industry and workers, would “impose a higher tax burden on Americans, while increasing the cost of living, and the costs imposed on entrepreneurs using the taxed materials.”

Interestingly, as of July 4, Auto Enthusiasts Newsblaster found no official statements on the GM, Ford, or Fiat Chrysler media websites that specifically take a position on the Trump-administration tariff proposals that would affect then industry.

However, domestic thought leaders focused on the U.S automotive industry have spoken out. An article published May 3 in the Detroit Free Press, for example, cites concerns from several experts about unintended consequences for the U.S. auto industry who point out that, for American automakers today, making cars is a truly global enterprise.

Not surprisingly, foreign automakers who sell cars in the United States have been more directly vocal.

In a June 28 statement, for example, Mazda contended that “A tariff is a tax and it will be paid by American consumers. It will significantly increase the cost of every new vehicle sold in America, regardless of where it is built. As Mazda begins construction of our new auto factory in Huntsville, Alabama, we urge the Commerce Department to reject the premise that auto imports are a threat to national security.”

Toyota also chimed in the following day, stating that “Tariffs on imported parts will disrupt U.S.-based production of motor vehicles, since it will deprive our U.S. manufacturing plants of key parts and components. Like most global automakers, including the Detroit-based companies, Toyota sources most key parts and components locally, e.g. engines and chassis, but also imports certain specialized parts and components. There is no vehicle in the United States, whether from Toyota, GM, Ford, FCA, Daimler or Hyundai, that is sole-sourced from exclusively U.S. parts and components.”

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