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The economic harm from potential U.S. tariffs on imported autos and components would dwarf that of any other trade policy implemented by the Trump administration so far, according to a new study by the Center for Automotive Research.

If 25 percent tariffs on auto products were imposed on top of existing tariffs on Chinese imports, and steel and aluminum, more than three-quarters of the damage would be related to taxing autos, even if the effects are partially mitigated by the potential implementation of a new trade agreement in North America, the think tank said.

The 28-page cost analysis (link below), which compared the combined impact of 10 different tariff scenarios, underscores the magnitude of the auto industry's reach in the U.S. economy.

The report, which was sponsored by the National Automobile Dealers Association, estimates:

As many as 366,900 U.S. jobs will be lost — including as many as 77,000 franchised-dealership jobs.

U.S. light-duty vehicle prices will increase by $2,750 on average.

U.S. new light-duty vehicle sales will drop by up to 1.3 million units per year.

Dealerships will lose $43.6 billion — or $2.6 million each — under the worst-case scenario.

Many consumers will be forced into the used-car market.

The cost of maintaining and repairing vehicles will go up.

The report's release comes ahead of a Monday statutory deadline for the Commerce Department to give the White House the results of its so-called Section 232 investigation into whether imported vehicles and parts pose a national security threat. President Donald Trump will then have 90 days to review the department's recommendations and decide what steps, if any, to take.

The estimates of increased vehicle prices, lower unit sales and lost jobs are noticeably smaller than a study CAR did last July, which focused only on the fallout from auto tariffs by themselves. The new analysis, however, assumes that Canada, Mexico and South Korea will be exempted from the auto tariffs because of refreshed trade deals.

"This analysis confirms that broad Section 232 tariffs on autos and auto parts still present the biggest trade-policy threat to consumers and the U.S. economy," said NADA President Peter Welch. "NADA understands and appreciates the administration's attempts to level the trade playing field and eliminate unfair trade practices, but expansive Section 232 auto tariffs are the wrong tool for the job."

There is no guarantee the Commerce Department will meet the Monday deadline. It could claim an extra 35 days for the time lost due to the government shutdown, but has not yet done so. It is also common for executive agencies to blow past due dates because there are few consequences for doing so.

A Commerce Department spokesman did not respond to an e-mail seeking comment.

Commerce Secretary Wilbur Ross has argued that the president should have the authority to impose higher tariffs as a way to pressure trading partners to lower their tariffs and other trade barriers. “If we could impose reciprocal tariff levels with other countries, it would be easier to negotiate free trade agreements with them,” he wrote in an op-ed column for Fox Business this month.

https://www.autonews.com/manufacturing/232-tariffs-pose-worst-trade-threat-yet-car-study-says

Center for Automotive Research Report cited in above article

https://www.cargroup.org/wp-content/uploads/2019/02/US-Consumer-Economic-Impacts-of-US-Automotive-Trade-Policies-.pdf

See also: Automakers brace for U.S. government report on import tariffs

WASHINGTON (Reuters) - A confidential Commerce Department report due to be sent to Donald Trump on Sunday is widely expected to clear the way for the U.S. president to threaten tariffs on imported autos and auto parts by designating the imports a national security threat, auto industry officials said on Friday.

The report’s recommendations may bring the global auto industry a step closer to its worst trade nightmare - U.S. tariffs on millions of imported cars and parts of up to 25 percent that many in the industry fear would add thousands of dollars to the cost of vehicles and potentially cost hundreds of thousands of jobs throughout the U.S. economy.

The contents of the report are expected to remain classified while Trump considers its recommendations, leaving the industry and major car exporters Japan, the European Union and South Korea in the dark about its consequences.

Auto industry officials said they expect the report to recommend at least some tariffs so that the administration can use the findings of the probe as negotiating leverage during negotiations this year with Japan and the EU.

The report is the result of an investigation started by the Commerce Department in May 2018 at Trump’s request. Known as a Section 232 investigation, the probe’s purpose is to determine the effects of imports on national security.

The final version will be sent to the White House on Sunday to meet a statutory deadline, a Trump administration source told Reuters.

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