One Year In – And No Sign of an Auto Tariff Resolution

Chairman's Blog: Hakes' Takes 05/13/19

While new tariffs on Chinese goods, which will indeed impact the auto sector, are in the spotlight this week, those of us in the auto industry are still carefully watching another trade crisis unfold: This week, we will hit the 90 day mark from when the Department of Commerce submitted to the White House the results of its national security investigation into imported autos and auto parts. The report was never made public, but President Trump has suggested that the findings give him the authority he needs to impose stiff tariffs on our industry.

According to the Trade Expansion Act of 1962, the president should make a decision on tariffs within a 90 day timeframe, or request more time for analysis. In reality, there are no binding deadlines and the Trump administration could easily draw this process out for months or even years.

Where does that leave dealers? In the same place we’ve been since this investigation was first announced almost exactly one year ago: limbo land.

Uncertainty over tariffs is a shadow over our stores, our manufacturers, and our customers. We’ve already seen steel tariffs bump up prices on cars. If 232 national security tariffs are placed on our products we can expect prices to rise by up to $7,000 per vehicle – more than enough to drop the SAAR by two million units and put hundreds of thousands of Americans (including dealership employees) out of work. Not exactly the jolt our already slumping industry needs.

I don’t claim to be an economist, but a few decades in the auto retail industry have taught me two undeniable truths: Uncertainty is a business killer and tariffs are taxes on the American consumer. Americans will be far better off when President Trump concludes once and for all what we already know. Our products are NOT a national security threat.

Thanks to the hard work of dealers who attended our AIADA fly-in last month and urged their legislators to sign onto a letter condemning the 232 tariffs, last week 159 Members of Congress, including 78 Democrats and 81 Republicans from 37 states, sent a bipartisan letter to Economic Policy Council Director Larry Kudlow, urging the Administration not to damage the auto industry and the U.S. economy by imposing harmful tariffs. It was a huge victory for dealers, who now have to continue to keep the pressure on the administration to pull back from tariff threats targeting our stores.

For this upcoming anniversary of the (insulting) national security investigation into our products, dealers want, and deserve, official acknowledgement that our stores and our products are NO threat to the American way of life. We need a commitment from President Trump that auto tariffs - a massive tax hike on Americans looking for safe transportation – are off the table. That would be the best anniversary gift of all.

Howard Hakes
2019 AIADA Chairman


Chairman's Blog: Hakes' Takes

In Hakes' Takes, AIADA Chairman Howard Hakes provides a look at the issues and trends facing the international nameplate auto industry.