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Trump Tariffs Would Raise Vehicle Prices

March 02, 2018

Photo via Gage Skidmore/Wikimedia.
Photo via Gage Skidmore/Wikimedia.

Associations representing manufacturers of vehicles and parts have spoken out against President Donald Trump's plan to place a 25% tariff on steel and a 10% tariff on aluminum imports.

Both metals are crucial to the production of cars and trucks sold in America today and could raise the sale prices of those vehicles substantially.

In addition to paying more for their vehicles, American consumers and workers can also expect to bear the brunt of the retaliatory tariffs other countries will almost certainly place on goods manufactured and exported from the U.S., said Cody Lusk, president and chief executive of the American International Automobile Dealers Association (AIADA).

"These proposed tariffs on steel and aluminum imports couldn’t come at a worse time," Lusk said. "Auto sales have flattened in recent months, and manufacturers are not prepared to absorb a sharp increase in the cost to build cars and trucks in America. The burden of these tariffs, as always, will be passed on to the American consumer. Car shoppers looking for a deal will instead find that they are paying a new tax to transport themselves and their families."

The Motor & Equipment Manufacturers Association (MEMA) also expressed opposition to the plan. MEMA represents more than 1,000 companies that manufacture vehicle parts and components.

"The tariffs announced on March 1 will be detrimental to the motor vehicle parts supplier industry and the 871,000 U.S. jobs it directly creates," said Steve Handschuh, MEMA's president and CEO. "We have voiced repeatedly that while we support the administration's focus on strong domestic steel and aluminum markets, tariffs limit access to necessary specialty products, raise the cost of motor vehicles to consumers, and impair the industry's ability to compete in the global marketplace. This is not a step in the right direction."

Steel and aluminum tariffs could directly counteract any benefits American manufacturers have seen from tax and regulatory reform. An analysis of tariffs on steel imposed in 2002 found that the Bush steel tariffs cost 200,000 jobs, including 30,000 in Michigan, Ohio and Pennsylvania alone, Lusk added.

Commercial Vehicle Industry Responds

Engine manufacturer Cummins was reserved in its response to the proposed tariffs in a statement saying, "We won’t know the full impact until the final rule is issued." The company referred to statements that it had previously made independently and in conjuction with the organization Business Roundtable, where the company voiced its concerns that such actions will hurt American businesses, workers and consumers.

The Business Roundtable is a politically conservative association of chief executive officers who lead U.S. companies and the organization came out in opposition to the President’s plan.

“It will hurt the U.S. economy and American companies, workers and consumers by raising prices and resulting in foreign retaliation against U.S. exporters,” Business Roundtable said in a statement about the proposed tariffs. “BRT shares the President’s goal of addressing global overcapacity of steel and aluminum. We urge the President to pursue other approaches that target unfair traders without putting various parts of the economy at such high risk, such as strongly enforcing U.S. unfair trade laws.”

Several commercial vehicle manufacturers declined to comment at this time, but a Navistar representative affirmed the company’s support for free trade and global supply chains and cautioned against tariffs that could impact U.S. manufacturer cost competitiveness and quality.

“If these tariffs are enacted, there’d be a significant impact to the commodities that are key components of commercial vehicles, making them more expensive for us to make, and ultimately, for our customers to purchase. Until seeing the final executive order, we’re not going to speculate further on the impact of this tariff," the company stated.

Comments

  1. 1. Richard [ March 05, 2018 @ 09:10AM ]

    They should be doing something about the jobs going overseas. Stop giving them tax breaks, when they move a company overseas. They should pass a law that says any Government, state or federal, has to use made in the US material. I heard on TV this morning, that said these tariffs would raise the price of a $ 35,000.00 car up $ 175.00.

  2. 2. Jeff [ March 06, 2018 @ 08:29AM ]

    That's the idea. Raise the price on imports so steel companies will start producing in America again ! Then jobs will be coming back to America !

  3. 3. William [ March 09, 2018 @ 02:56AM ]

    Are all these articles written by liberal socialists?
    Anyone capable of thinking for themselves can see this is the art of the deal. The President has already said he's working out deals with Canada and Mexico to renegotiate NAFTA guidelines to better favor US trade and lessen or eliminate tariffs to those countries that work with us instead of shafting us.
    This chicken little sky is falling crapload is ridiculous.
    For once, we have a leader looking out for the citizens of the USA, not his buddies' pockets.
    MAGA.

  4. 4. Andrew H [ March 09, 2018 @ 03:51AM ]

    Someone did the math. On a $25,000 car, the increase would be around $180.

    In the end, Tariffs are being used by Trump as a bargaining chip. He knows the US has been screwed on trade deals for decades and he's now settling the score.

    Make a deal that benefits us, we won't tax your exports. But if you don't, we're taxing them 25%.

    Glad someone is making an effort to reduce the 800+ billion a year trade defecit.

  5. 5. Steve [ March 09, 2018 @ 05:52AM ]

    Here is how this has played out in the past.

    American manufacturers need the steel and aluminium to make their widgets. The US does not produce enough steel and aluminium to meet the manufacturers’ demands so they import what they need. Now the price of steel and aluminium from off shore has just gone up, this is supposed increase demand for US made steel. Didn’t I just say that the US doesn’t produce enough steel? So the imports will continue and prices will rise.

    If US steel production does increase it is only because the inefficient US production factories now become viable due to the higher prices. This only continues to force prices up.

    But if the tariff forces the price of raw materials too high for the widget maker, guess what happens? The whole widget factory moves to China. Because while there is a high duty on steel, there isn’t on complete widgets.

    Donald Trump seems fixated on trade deficits and considers them a bad sign. I thought Mr. Trump went to school. I would love to hear his answer to this: If a country consumes more goods than if could ever possibly produce, where are these goods supposed to come from?

    The USA must run trade deficits with most of the world if it plans to maintain it’s high standard of living. There is no way to avoid that.

    Simple math. Your country produces X, but consumes X plus Y. Then Y must be imported.

    Yes the USA could raise some production but don’t they have almost full employment now? Also babyboomers are retiring and their offspring lack in numbers. So where do the new workers come from? America already has a shortage of skilled labor

    Im not a liberal but im also not stupid. We can be more productive by not arguing in slogans.

  6. 6. Steve L [ March 09, 2018 @ 06:57AM ]

    Steve, you're leaving a lot of facts out of your history lesson. Every country on the planet imposes a tariff and/or a value added tax on products that we export into their countries, something we have never done to promote world trade. Over the last 50 years our manufacturing sector has been decimated not by it's inefficiencies, but by the low cost of labor overseas and their ability to produce produce products at a lower price. Our standard of living was the highest in the world among the middle class, and now the middle class in other countries is enjoying that same standard of living because of manufacturing jobs. But as their employee wages rise and the cost of their products go up, they are now becoming less competitive on the world market, even without the tariffs imposed by Trump. Those tariffs are leveling the playing field, and only doing what everybody else has been doing to us for a very long time.

    American manufacturers weren't inefficient. We made the highest quality products in the world at a competitive price and we still can and will again as long as the world has to play by the same rules as we do..

  7. 7. Dan [ March 09, 2018 @ 07:57AM ]

    This is going to bring more jobs to America because the owners of these factories are not going to want to pay a tariff so president Trump gave them an offer he said if you open up companies in America and hire American citizens and legal immigrants you will not be taxed there for Americans will be put back to work steel mills are already starting to open up in Ohio getting ready to produce more American Steel now let's start making America great again people!
    TRUMP 2020!!!

  8. 8. Dander [ March 09, 2018 @ 08:09AM ]

    this 'america made the best and will again' jabber is ridiculous. the american consumer/worker wanted more for less, unions are bloated entities and work to the least standard, the other NAFTA partners will also hammer out a deal that best represents themselves--NO ONE will be saying, "oh of course, America, we'll take less so you can have more", tax breaks are what help makes corporations profitable and not one capitalist, including Trump Inc., will ever do anything that upsets that balance. You're living in some movie about how the 'little guy' wins over the 'big bad corporate entity'.

  9. 9. Steve g [ March 09, 2018 @ 03:58PM ]

    Tariffs create an artificial economy that benefits only in the short term. It's not a long term solution to anything. Taxing imports creates a bubble because cheaper steel is available elsewhere. Trump wont be president forever. Republicans wont control all three branches of the government for long and republicans are dumping the trump train. Tariffs can be reversed at any moment as soon as Trump loses leverage. And he will lose leverage. Its not a matter of if but when. So when tariffs are reversed, whats happens then? The bubble will burst because tariffs created artificial economies and not real ones. Imports should be taxed less and not more. The economic future of america is not in manufacturing. It's in tech because manufacturing is highly competitive. America is not some third world country and we shouldnt apire to push policy to match third world countries. The free market is more important today than ever. Enough is enough and stop with meaningless taxing. There's a storage of skilled labor and wages aren't rising enough. Let's focus on that first.

  10. 10. Charles Ball [ March 09, 2018 @ 04:34PM ]

    I believe the extra cost to a car is something minuscule, like $125 extra to the price. Nothing to be scared of.

  11. 11. Michael Brettler [ March 11, 2018 @ 12:12AM ]

    Some of you make me laugh. How about looking at what Pittsburgh once was and what it is now. It used to be called the Steel City for a reason. I don't have numbers to back me up here but a good majority of the steel mills shut down and torn down. How are we as a country supposed to up the production of steel if we don't have the infrastructure to make it. We have the people willing to work but they need to have a fair wage. For all you anti unionists out there. Those of you who believe unions just collect dues and sit back are wrong. I do part time work for a union. When I am on the job I get the same pay and protections as a full time worker. If i were to get hurt on the job I am also covered..Not many NON union jobs will do that. There is also job security because I am also protected by the binding contract. In a right to work state unless you have a binding contract with the employer you don't have a leg to stand on.

 

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