Automotive firms’ executives pushed back on the Trump administration’s proposal to drastically raise tariffs on auto imports from the European Union.
Industry executives testified at the first of the two-day hearing that the US Commerce Department holds. The high-ranking officials warned against tariffs, saying such duties would hurt US jobs, as well as raise prices for consumers and invite the European Union to retaliate with import duties of its own.
“We are the leading export sector in the US economy,” stated that former Missouri Governor Matt Blunt. Blunt is currently the president of the American Automotive Policy Council. He also said that China and Europe each receive around 250,000 US-made vehicles every year.
“That is a number that can grow,” he added.
Meanwhile, Japanese automaker Toyota stated that employees from 10 of its US assembly plants were protesting against the tariffs in Washington, DC. Toyota exports 8 of its US-made car models across 31 countries.
At present, the US imposes a 2.5 percent tariff on cars imported from Europe. US President Donald Trump has stated that he wants to increase that tariff to 20 percent, on top of a 25 percent tariff on imported pickup trucks that dates back several decades.
The administration has justified increasing the tax penalties by invoking Section 232 of the Trade Expansion Act of 1962, which grants the government the power to investigate the potential effect of imports on national security and prevent those that pose a threat from coming through.
It is extremely rare to use national security threats to penalize automotive imports. However, Commerce Secretary Wilbur Ross has stated that national security is connected to US economic security.
Ross stated in his opening remarks on Thursday that it is “too soon” to find out whether the US government will increase tariffs.
The Commerce Department has expressed concerns regarding the country’s estimated $32 billion auto trade deficits with Europe. Such figure means that US consumers buy $32 billion more in European cars than US automakers sell back to European customers.
The Trump administration has already slapped steep tariffs on billions of dollars of imports from China, including vehicles and parts.
According to the testifying labor officials from the United Auto Workers union, a “comprehensive investigation” into the US trade deficit with other countries has been “long overdue.” They added that trade has inconvenience American workers in many ways over the last several decades.
On the flip side, according to a recent paper from industry analysts from the Center for Automotive Research, tariffs on US imports of automobiles and automotive parts will increase prices of all new vehicles by $455 to $6,875 per piece, “depending on the level of tariff or quota, where the vehicle was assembled, and whether the policy provides exemptions for automotive trade with Canada and Mexico.”
Several foreign automakers from Japan, Germany, and other countries have operational plants in the US where vehicles are manufactured for the US market as well as for export to other countries.
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