Analysts trump doesn’t get the auto industry; tariffs hurt consumers 10 gases and their uses

####

The Alliance of Automobile Manufacturers, which represents U.S. automakers and many foreign companies, criticized Trump’s move: "We are confident that vehicle imports do not pose a national security risk to the U.S. … We urge the administration to support policies that remove barriers to free trade and we will continue to work with them and provide input to achieve that goal.”

Trump rolled out 25% tariffs on steel imports and 10% on aluminum in March but offered temporary exemptions to the European Union, Canada, Mexico and a number of other allies. India and China are challenging the tariffs before the World Trade Organization, Reuters reported.

Analysts wondered whether Trump’s auto announcement wasn’t a play for votes in the industrial north — Michigan, Pennsylvania, Ohio and Illinois — as political parties vie for control of statehouses and the U.S. House is heading into a volatile midterm election cycle.

"There is no vehicle manufactured in the U.S. today that doesn’t have at least one part from outside the U.S.," he said. "Every vehicle assembled today requires a logistical symphony due to the far corners of the world that some parts come from. With the exception of Tesla, every vehicle manufacturer imports and exports vehicles based on U.S. consumer demand. GM and Ford have vehicles that come from Asia or Europe. Some are so low volume that they don’t warrant manufacturing capacity in the U.S. to support it."

At the Brookings Institution, a public policy research center in Washington, D.C., Joe Parilla, a fellow at the Metropolitan Policy Program who studies the effects of trade, said Michigan, Ohio, Indiana, South Carolina, Alabama and Tennessee are among the states that could feel the impact of tariffs the most because of plants in those states.

"To make things in a modern global economy you need to be able to import (other items to make them) pretty seamlessly," he said. Parilla said that by imposing tariffs — if that were to happen — you might create more jobs in the long run but you also run the risk of pushing manufacturers out of the country altogether as they try to remain competitive worldwide.

“We are all learning that initial bluster can be just that, so time is needed to see what will actually come to pass," said Jonathan Smoke, chief economist at Cox Automotive. "Like threats of changes to country of origin numbers in NAFTA, the impact to the industry would vary. A new import tariff would hurt luxury models the most. A tariff would raise prices and limit consumer choice, but would encourage more domestic production. There would be winners and losers from such a move throughout the value chain if it comes to pass.” Foreign companies in U.S.

And the foreign-based car companies point out that they employ hundreds of thousands of Americans in manufacturing operations and car dealerships all over the country. Global Automakers lists state-by-state data on the multibillion dollar economic impacts of its members.

To highlight a few; Honda builds in Alabama, Georgia, Indiana and Ohio; Toyota builds in Alabama, California, Indiana, Kentucky, Mississippi, Tennessee and Texas; Volkswagen builds in Tennessee; Hyundai builds in Alabama and Georgia; Kia builds in Georgia; BMW builds in South Carolina; Mercedes-Benz builds in Alabama, Indiana and South Carolina; Nissan builds in Mississippi and Tennessee; Subaru builds in Indiana.

Trump has indicated he may withdraw from the agreement that he — and many blue-collar voters and their labor leaders — have argued drives jobs out of America to Mexico and elsewhere. Yet automakers have been supportive of NAFTA, with partnerships and investments formed over the past two decades.

"I am not happy with their requests," he continued. "But I will tell you, in the end, we win. We will win, and we’ll win big. We’ll get along with Mexico; we’ll get along with Canada. But I will tell you, they have been very difficult to deal with. They’re very spoiled — because nobody has done this. But I will tell you that what they ask for is not fair."

"It seems designed to pressure Canada and Mexico to accept the U.S. proposal at the NAFTA table," Dziczek said. "Could be, but there are plenty of UAW jobs tied to making engines, transmissions and other parts for vehicles imported from Canada and Mexico."

The U.S. Commerce Department statement said: "The investigation will determine whether imports of automobiles, including SUVs, vans and light trucks, and automotive parts into the United States threaten to impair the national security … Secretary [Wilbur] Ross sent a letter to Secretary of Defense James Mattis informing him of the investigation.

“There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry,” Ross said in the release. “The Department of Commerce will conduct a thorough, fair and transparent investigation into whether such imports are weakening our internal economy and may impair the national security.”

The statement then goes on to say, "From 1990 to 2017, employment in motor vehicle production declined by 22%, even though Americans are continuing to purchase automobiles at record levels. … This investigation will consider whether the decline of domestic automobile and automotive parts production threatens to weaken the internal economy of the United States, including by potentially reducing research, development, and jobs for skilled workers in connected vehicle systems, autonomous vehicles, fuel cells, electric motors and storage, advanced manufacturing processes, and other cutting-edge technologies."