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NADA Chairman: Auto Tariffs Are the Wrong Way to Address Trade Concerns
By Wes Lutz, June 2018
When the NADA Board of Directors met earlier this month in
New York, developments in Washington, D.C., once again dominated the
conversation among directors from all over the country. No surprise there. But
what was surprising was the specific area of policy currently under consideration
in Washington. I’m referring, of course, to the possibility of tariffs of as
much as 25% on potentially all imported vehicles and automotive parts.
Our directors had a number of questions before we even got
to specific concerns. How did we get here so quickly? How did we go from
tariffs on imported steel and aluminum from certain countries to a potential
across-the-board tariff on imported vehicles? How will the process of the
Department of Commerce’s “national security” investigation unfold?
Perhaps most importantly, how can a president who’s done so
much good for our industry and the nation’s economy – through a historic tax
cut and tax policies allowing dealerships to invest more in their businesses
and their employees – now be proposing something that could raise new vehicle
prices by thousands of dollars?
My view is that you have to look beyond the tariffs
themselves in order to understand what is unfolding in Washington. And in that
respect, I believe President Trump is rightly concerned with three things. The
first is the loss of manufacturing jobs in the U.S. over the past 40 years. The
second is the U.S. trade deficit, which was a staggering $568 billion in 2017.
And the third is an unlevel playing field when it comes to international trade
that puts the U.S. at a significant disadvantage in many areas, even with our
strongest trading partners.
president wants to negotiate better trade deals for the U.S., American workers
and American consumers. He’s right to be concerned about the trade deficit. But
the tactic of new and steep tariffs on auto and auto parts imports, if
implemented broadly, would hurt the auto industry and our customers and have
severe unintended consequences.
first job for dealers and our partners on the manufacturing and supply side is
to educate the administration on the complexity and interconnectedness of the
auto industry. The notion that there are truly “domestic” and “international”
brands simply isn’t true any longer. Manufacturers are globally integrated, and
their supply chains routinely span international boundaries. In fact, many
international brand vehicles are assembled in the U.S. with mostly American-made
parts, while some domestic brands have models that are manufactured abroad and
imported here. Consequently, some domestic brands could get hit harder with
tariffs than some international brands.
to the point, though, it’s our customers who would feel the most dramatic
effect of broad import tariffs through a combination of higher prices and fewer
choices, as all imported vehicles and even U.S. built vehicles get dramatically
more expensive, and some imported models are no longer offered for sale in the
from a distance, it’s easy to see that broad-based tariffs on vehicles and auto
parts would result in seismic unintended consequences. So, as we have done so
many times before, NADA is rolling up its sleeves and getting to work. We are
hard at work educating the administration about the reality of the auto
industry, and we are urging Congress to exercise oversight on this process and
identify the potential economic impacts of any new tariffs. We are working on
an independent economic impact study designed to measure the potential impact that
tariffs would have on dealerships and their American customers, and we will
present the results of that study to the Department of Commerce through our
testimony at a July public hearing.
we will be clear throughout: NADA is not opposed at all to the president’s
goals of addressing unfair trade practices and preserving American jobs. But we
must find the right tools for accomplishing those goals. Overbroad tariffs on
autos and auto parts are the wrong tools because they will raise prices on new
cars and trucks and jeopardize affordability and choice for millions of our
Lutz is 2018 NADA chairman and
president of Extreme Chrysler-Dodge-Jeep-Ram in Jackson, Mich.