Washington — General Motors Co. warned the Trump administration Friday that tariffs of up to 25 percent on imports of cars and auto parts could weaken the company and put jobs of U.S. autoworkers at risk.
In comments submitted Friday to the U.S. Department of Commerce, GM warned: “If import tariffs on automobiles are not tailored to specifically advance the objectives of the economic and national security goals of the United States, increased import tariffs could lead to a smaller GM, a reduced presence at home and abroad for this iconic American company, and risk less — not more — U.S. jobs.
GM’s warning came as an executive for Fiat Chrysler Automobiles said the company is making plans to adjust its manufacturing footprint globally as President Donald Trump’s threats over levies escalate. And Japan’s government, while not explicitly saying it would retaliate with its own tariffs if levies are placed on Japanese cars, warned that “rebalancing measures” by other countries might hurt U.S. manufacturing and agriculture.
At the request of the president, the U.S. Commerce Department is conducting an investigation of the national security impact of allowing imported cars to come into the U.S. In making the request, Trump cited a section of federal law that allows the president to impose tariffs if he determines a security threat exists.
In comments submitted to the Commerce Department in opposition to such a move, GM said: “The threat of steep tariffs on vehicle and auto component imports risks undermining GM’s competitiveness against foreign auto producers by erecting broad-brush trade barriers that increase our global costs, remove a key means of competing with manufacturers in lower-wage countries, and promote a trade environment in which we could be retaliated against in other markets.
The automaker went on to say: “The penalties we could incur from tariffs and increased costs will be detrimental to the future industrial strength and readiness of manufacturing operations in the United States, and could lead to negative consequences for our company and U.S. economic security.”
Robert Lee, head of Fiat Chrysler U.S. LLC’s Powertrain Coordination and a member of the automaker’s Group Executive Council, told Bloomberg News that Fiat Chrysler is developing contingency plans that could alter where products are made if tariffs increase the cost of building vehicles in the U.S.
“It’s contingency planning on a massive scale – supply-based planning, logistics planning, vehicle-build location planning,” Lee said. “This is not trivial, and it’s been going on for awhile.”
Japanese automakers warned the U.S. government Friday that tariffs would result in higher prices for domestic car-buyers and drastic changes to their manufacturing strategies.
Toyota said that 25 percent tariffs would increase the cost of a Toyota Camry by nearly $2,000.
“To give a Toyota example, the Camry is built in Kentucky, and has been the best-selling car in America for 19 of the last 20 years and one of the best American-made cars you can buy,” Toyota wrote. “But even the Camry has about 30 percent non-U.S. content. This means the Camry would see a cost increase of $1,800 (based on a price of $23,645). Ultimately, this cost will likely be passed along to consumers in the form of higher prices.”
Mazda said Friday tariffs would force it to reassess U.S. manufacturing plans and its ability to maintain a robust domestic dealer network.
“If the maximum tariff of 25 percent were to be imposed on imported automobiles, like other automobile manufacturers, Mazda would incur a substantial financial burden,” the company wrote. “It might also result in changes to the company’s plans to invest in its dealer network and in the new plant in Alabama, and endanger the company’s U.S. business, which employs more than 30,000 workers.”
The Japan Automobile Manufacturers Association, which represents Honda, Toyota, Nissan, Subaru and Mitsubishi, warned tariffs “would have a serious negative impact on U.S. consumers and workers, the U.S. automotive sector and the U.S. economy.”
The group also questioned the idea that imported cars propose a national security threat that would warrant tariffs.
“Imported vehicles do not threaten the United States national security,” the association wrote. “Rather, they increase the options for users’ diversified needs with regard to vehicle supply while creating new demand in the market, and they have contributed to the sustainable growth of the U.S. automobile industry including vehicle dealerships.”
The Japanese government said in a position paper filed with the Commerce Department on Friday that threatened tariffs on cars and auto parts would put “the global free trade system at great risk.” It stressed Japanese carmakers’ contributions to the U.S. economy. It noted that Japanese automakers produce “as many as 3.8 million cars” in the U.S., many of which are subsequently exported. Any U.S. trade restrictions “could seriously affect more than 1.5 million jobs created by Japanese auto-related companies in the U.S.,” it said
The tariff investigation process, known as a Section 232 investigation in reference a trade law passed in 1962, was used recently by the Trump administration to propose tariffs on imported aluminum and steel. The Trump administration has argued that auto imports pose a similar threat. “Core industries such as automobiles and automotive parts are critical to our strength as a nation,” the White House said in May 23 statement announcing the launch of the investigation.
The investigation and implementation could take up to a year, if the example of the metals tariff is any indication.
U.S. lawmakers have also raised concerns about increased cost to car buyers.
“The average price of an imported car is $23,200,” U.S. Sen. Orrin Hatch, R-Utah, said in a committee hearing last week. “If the Department of Commerce were to recommend a 25 percent tariff on cars, it would be recommending raising the cost of an average imported car for an American family by $5,800. To put that in perspective, the median household income in the United States is just over $59,000. That means that roughly 10 percent of the median household income could be erased purely by the additional cost of a single car.”
Bloomberg News contributed.
klaing@detroitnews.com
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