NADA Legislative Priorities

May 1, 2020

OVERBROAD RECALL BILL WILL CREATE A CONSUMER TRADE-IN TAX (S. 1971)

Automobile Sen. Richard Blumenthal (D-Conn.) introduced S. 1971, legislation that would cripple the used-vehicle market by halting a dealer’s sale, lease, wholesale or loan of used vehicles under any open recall. The bill is overbroad because most recalls do not require the drastic step of grounding. Additionally, the bill would create a “trade-in tax” that would instantly devalue a car buyer’s trade-in by grounding recalled vehicles for minor matters, such as a peeling sticker. Finally, the bill would push recalled vehicles into the unregulated private market, making it more difficult to complete recall repairs. Similar legislation will likely be introduced in the House of Representatives. Congress should oppose overbroad recall legislation and focus on initiatives to improve consumer response to vehicle recall notices and increase recall completion rates.

SUSPEND THE FEDERAL EXCISE TAX (FET) ON HEAVY-DUTY TRUCK

Due to the coronavirus pandemic and a weakened economy, annual truck sales in the U.S. are predicted to decline by 50% in 2020. In March alone, Class 8 truck orders dropped by 52% compared with the same time last year. As a result of closures, some of them government-ordered, truck manufacturing plants and dealers have either suspended or scaled back operations. Still, the trucking industry is playing a vital role during the pandemic by moving freight and delivering critical food and medical supplies. Suspension of the 12% federal excise tax (FET) on heavy-duty trucks and trailers would spur new-truck sales, help revitalize the trucking industry and save jobs. On April 28, ATD and 116 organizations sent a letter to congressional leaders urging for suspension of the FET. During consideration of coronavirus recovery legislation, Congress should suspend the FET until the end of 2021.

POTENTIAL NEW AUTO TARIFFS THREATEN U.S. JOBS AND WILL HURT CONSUMERS (Tariffs/USMCA)

Automobile and truck dealers support President Trump’s goals of modernizing U.S. trade agreements and moving toward freer and fairer trade. For example, NADA supported the U.S.-Mexico-Canada Agreement (USMCA), recently passed by Congress. However, steep new tariffs of up to 25% on imported autos and auto parts would hurt the auto industry and consumers. The administration had previously threatened to impose tariffs pursuant to a Section 232 investigation that found autos and auto parts imports threaten to impair national security, but the November 14 deadline lapsed without action. Nonetheless, President Trump indicated that the administration is still considering imposing auto tariffs. Legal experts disagree on whether the President still retains the legal authority to impose tariffs under Section 232 since the deadline expired. President Trump still has the option, however, to use Section 301—the same authority he used to impose tariffs on Chinese goods—to impose additional auto tariffs. 

These potential new auto tariffs would impact all dealers, since no vehicle in the U.S. is 100% domestically made, and the average vehicle assembled in the U.S. has an international parts content of 40%. According to a study by the Center for Automotive Research, auto and auto parts tariffs would increase vehicle prices by $2,750 on average per vehicle, cause a decline of up to 1.3 million vehicle sales and result in a loss of 367,000 American jobs. Congress must ensure that any new trade initiatives do not unduly increase vehicle prices, stifle demand for new vehicles or jeopardize American jobs.

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