General Motors is one of the latest to weigh in on the threat of new tariffs targeting foreign autos and automotive parts, warning that GM could be forced to scale back production and cut U.S. jobs.
GM Chairman and CEO Mary Barra, who briefly served on President Donald Trump’s economic advisory council before it was disbanded last year, is the latest to come out against tariffs that could run as high as 25 percent. Harley-Davidson has already announced plans to move some production abroad, while BMW has said it would likely cut back operations at its Spartanburg, South Carolina plant that is currently the largest exporter of American-made automobiles.
“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 said in a statement submitted to the Commerce Department which has been ordered to consider whether auto imports are a threat to national security and, if so, whether tariffs need to be implemented.
That threat has triggered a sharp backlash from across the auto industry — something all the more significant because critics even include domestic automakers, like GM, that have, in the past, raised concerns about unfair trade practices.
Last week, the Alliance of Automobile Manufacturers, or AAM, issued an analysis estimating the price of a typical new vehicle sold in the U.S. would rise by about $5,800. Foreign-made luxury vehicles, such as a Mercedes-Benz S-Class or Lexus LS, could cost tens of thousands of dollars more. But industry officials warn even American-made models will be impacted because they typically use some imported parts and components. Toyota expects it would have to raise the price of its American-made Camry sedan, one of the U.S. market’s most popular vehicles, by about $1,800 if the 25 percent tariffs were put in place.
LMC Automotive last month estimated a 25 percent tariff would reduce U.S. auto sales by 1 million annually. That’s without factoring in the downturn in the American car market that began last year, the first slide in sales since the end of the Great Recession.
The Association of Global Automakers last week predicted that “hundreds of thousands of American jobs” are at risk, while the Japanese government estimated that a minimum 200,000 U.S. workers linked to “transplant” factories, dealerships and other facilities operated by Japanese auto brands could lose their jobs. And the Japanese report said that number could climb as high as 624,000 if it and other trade partners choose to retaliate — an increasing likelihood. The larger figure comes from a separate study conducted by the Peterson Institute for International Economics.
The virtually unanimous anti-tariff position taken by the automotive industry is all the more striking in that it has united competitors who seldom share a common viewpoint.
The Trump administration’s proposed tariffs put global free trade “at great risk,” the Japanese report declared, adding that such a move could backfire, threatening to “eventually undermine the entire U.S. economy.”
There are already signs that U.S. jobs may soon be lost. Last week, Wisconsin-based Harley-Davidson announced it will move some production offshore because retaliatory tariffs being imposed by the European Union would raise the price of the products it sells there by an average $2,200. Europe is one of the motorcycle maker’s largest foreign markets, accounting for nearly one in six of the bikes it sells. Another U.S. motorcycle manufacturer, Minnesota-based Polaris, on Friday said it may similarly move some production due to European tariffs.
If the possible loss of jobs is worrying the president, he isn’t showing it. After Harley’s announcement, Trump countered with a tweet that said, “they will be taxed like never before!" And, in a pre-taped interview that ran on Fox News over the weekend, he added that “I think they’re going to take a big hit (from) my voters.”
The virtually unanimous anti-tariff position taken by the automotive industry is all the more striking in that it has united competitors who seldom share a common viewpoint. In particular, it marks something of a reversal by Detroit-based automakers. Over the years, they have frequently complained about unfair trade practices – especially hefty tariffs — levied by foreign trade partners.
In the early 1980s, Detroit’s Big Three manufacturers lobbied Congress and the White House to take steps to reduce surging sales of Japanese auto imports, insisting there was a need for a “level playing field.” Japan headed off tariffs and other possible trade barriers by enacting a supposedly “voluntary” restraint agreement, or VRA, limiting exports to the U.S. But automotive analysts estimated the agreement ultimately drove up new car prices by thousands of dollars, something that is widely expected to happen if Trump follows through with his tariff threat.