Automakers to Trump: Cars are not a national security threat – Washington Examiner

If the negotiation had taken place at a car dealership, it would have ended with the customer walking away — without the keys to a new vehicle in hand.

Automakers aren’t buying President Trump’s assertion that vehicle imports represent a national security threat.

While they’re relieved by his decision not to immediately impose tariffs that he says would address the concern, instead ordering U.S. Trade Representative Robert Lighthizer to take six months to conduct talks with trading partners on the matter, they would prefer that the White House change course.

“We are deeply concerned that the administration continues to consider imposing auto tariffs,” said Wade Newton, a spokesman for the Auto Alliance, a trade group representing companies behind 70% of all U.S. auto sales. “By boosting car prices across the board and driving up car repair and maintenance costs, tariffs are essentially a massive tax on consumers.”

The higher prices would curb consumer demand and might cost as many as 700,000 U.S. jobs, he added. It’s an assessment that mirrors broader concerns from economists, business executives, and some lawmakers about Trump’s protectionist policies, which include duties on $250 billion of Chinese imports so far as well as levies on steel and aluminum purchased from allies and rivals alike.

That the administration chose to weigh 25% tariffs under Section 232 of the Trade Expansion Act of 1962, which allows them on national security grounds, was problematic enough for automakers. That the Commerce Department under the direction of Secretary Wilbur Ross concluded a threat actually exists is worse, especially since the report containing those conclusions has never been shared publicly.

In essence, says John Bozzella, CEO of the trade group Global Automakers, the department believes the decisions by 8 million Americans to buy imported cars in 2018 threatens “to impair the national security of the U.S.,” he said.

“This is absurd,” he added. “International automakers develop and build more than half of the vehicles made in America each year. An American engineer working for a ‘foreign’ auto company in Michigan is no more of a national security threat than an American engineer working for an ‘American-owned’ auto company in Michigan.”

What the administration based its determination on is unclear, he added, since no one in the industry asked for government protection and many urged the Commerce Department last year not to take its plan any further.

Carmakers from General Motors, the American icon behind the Chevrolet Camaro and the Cadillac Escalade, to foreign manufacturers such as BMW, Honda, and Volvo that build autos in the U.S. warned that the duties will push up their supply expenses, curb American exports and, ultimately, eliminate well-paying employment the president promised to increase during his 2016 campaign.

Across the U.S. auto industry, a 25% tariff would force buyers of imported cars to pay an average of $5,800 more, costing American consumers about $45 billion, based on 2017 sales data.

That has the potential to disrupt employment in states like Alabama, home to plants for Mercedes-Benz and Hyundai, and South Carolina, where BMW and Volvo both have factories. The states each contributed nine electoral votes to the 304 that Trump won in 2016 and are important to his reelection prospects next year.

Republican lawmakers quickly expressed chagrin Friday at the White House’s decision.

“We must rein in misuse of the Section 232 trade law,” said Sen. Rob Portman, an Ohio Republican who served as U.S. Trade Representative during the George W. Bush administration. Portman has introduced a bill that would require the Defense Department to justify new tariffs under the 57-year-old legislation. “Minivans manufactured in Canada are not a national security threat to the U.S.”

The European Union’s trading commissioner, Cecilia Malmstrom, said the trading bloc is open to negotiations with the U.S. but dismissed the basis of the Trump administration’s proposal.

“We completely reject the notion that our car exports are a national security threat,” she said.