Fall Brings New Developments on Trade

Chairman's Blog: Strong's Opinions 10/11/18

Autumn has been an eventful season for trade, including the signing of the renegotiated U.S.-South Korea Free Trade Agreement (KORUS) and the finalizing of a trilateral agreement on what was NAFTA, now known as the United States-Mexico-Canada Agreement, or USMCA. Details of USMCA are still being absorbed, and auto manufacturers in particular are assessing how they will be impacted by new requirements and standards. Dealers, for the most part, are hopeful that these recent developments are a positive sign that we are putting some of the instability surrounding trade in our rear view mirror.

While KORUS and USMCA do offer details and stability, the threat of damaging 25 percent tariffs on imported autos and auto parts remains, as part on an ongoing Department of Commerce 232 investigation. A 25 percent tariff could raise the price of a new car by as much as $7,000. That might be an abstract threat in Washington, D.C., but for those of us in the rest of the United States, buying and selling cars and trucks, $7000 can mean the difference between a sale and a “sorry, we can’t swing that.”

Earlier this month, Kentucky dealer and AIADA board member Steve Gates traveled to Washington to testify before the Senate Finance Committee on this very issue. He, along with representatives from auto and parts manufacturers, warned members of the committee that tariffs could have unintended consequences. Gates informed them that auto payments could rise by $120/month, putting a new vehicle out of reach for many of his customers, adding “if a 25 percent tax is levied on imported vehicles and parts, it won’t matter how good of a car dealer I am, people can’t or won’t buy cars – they will just be too expensive.”

All eyes now are on President Trump and his trade negotiators, as they (hopefully) work to come to trade agreements with Japan and the EU. If we can open dialogue and secure pacts with those trading partners, we’ll be moving in a positive direction.

Until 232 auto tariffs are permanently taken off the negotiating table, AIADA will continue to stay on top of this issue, work to keep you informed, and strive to create a trade environment where retailers can once again plan for the future without tariffs looming overhead.

Brad Strong
2018 AIADA Chairman

Chairman's Blog: Strong's Opinions

In Strong's Opinions, AIADA Chairman Brad Strong provides a look at the issues and trends facing the international nameplate auto industry.