Auto industry officials are cautiously breathing a sigh of relief after hearing word from Washington that the Trump administration may delay, possibly even scrub, a move that could impose new tariffs of up to 25 percent on imported vehicles and car parts.
President Donald Trump met with his trade advisers on Tuesday to discuss, among other things, the status of a Commerce Department investigation into trade practices that began last May. It could result in sanctions under section 232 of the Trade Expansion Act if it’s determined that auto imports pose a threat to national security. But critics, including virtually the entire auto industry, as well as several foreign leaders, have warned that such a move could touch off a much wider trade war.
The auto industry also fears that new tariffs, on top of those already enacted on Chinese-made vehicles and imported aluminum and steel, could have a major negative impact on the American new car market. Consumers could be hit with higher prices that would put the brakes on already declining car sales, hammering industry profits.
More than $1 billion
“Costs have gone up and (are being) passed onto end consumers,” Jack Hollis, the general manager of the Toyota division for Toyota Motor North America told CNBC after a media preview of the 2020 Corolla. The sedan will be assembled at two U.S. plants, including one now being built in Alabama as part of a joint venture between Toyota and Mazda.
The auto industry has found itself at ground zero in the Trump Administration’s trade war. Indeed, then-candidate Donald Trump put Ford in the spotlight early in his campaign, publicly calling the automaker out in 2016 for planning to move production of some passenger car models to Mexico.
“We shouldn’t allow it to happen,” the then-candidate said in September 2016, while warning he would enact major tariffs targeting the Detroit automaker if he won. In turn, Ford Chairman Bill Ford called the comments, “infuriating.” But despite meeting with Trump, the blistering comments and tweets continued, even after the 2016 election. If anything, President Trump turned up the heat, also targeting GM, Toyota and other automakers in his steady stream of tweets.