Industry Groups Say Yes To Trade Reform, But No To New Auto Tariffs

Forbes Lifestyle 2 months ago

Some auto industry groups and other trade organizations tread a fine line: they want to see China and other trading partners reform their trade practices, and they support in some cases Trump Administration initiatives such as the new United States-Mexico-Canada Agreement — but at the same time they oppose the Administration’s proposed tariffs on auto imports.

“NADA strongly supports passage of USMCA,” said Texas auto dealer Charlie Gilchrist, 2019 chairman of the National Automobile Dealers Association, in a speech hosted by the Automotive Press Association in Detroit on Oct. 8. “The USMCA is a win for us. Let’s make it happen,” he said in remarks directed at the U.S. Congress.

Robots at the FCA Saltillo Van Assembly Plant in Mexico.

The dealer association likes the USMCA because it doesn’t raise major barriers to U.S. automotive trade with Mexico and Canada. That’s important since there’s so much cross-border movement in both parts and in fully assembled vehicles, Gilchrist said.

On the other hand, the dealer association and other industry groups are against the Administration’s proposed tariff of 25% on the value of imported autos and auto parts from other parts of the world, which could start to go into effect soon if U.S.-China trade negotiations fall through.

“The auto industry has been clear that broad-based auto tariffs … would wreak havoc,” Gilchrist said. Tariffs “would increase prices for consumers, which lead to fewer sales, which would lead to job losses,” he said. “I don’t think … President Trump wants that.”

Separately Jake Parker, senior vice president at the US-China Business Council, said in a recent podcast sponsored by the Peterson Institute for International Economics his organization is all for trade reform in China but against tariffs as a means to get there. Unintended consequences include retaliation by U.S. trading partners, and higher consumer prices on both sides of the dispute.

“We want China to make these concessions,” he said, in areas such as protecting intellectual property. However, he said, “We don’t feel tariffs are the right way to go.”

Rather, the council said U.S. negotiators should work more closely with U.S. allies, and seek redress in international bodies such as the World Trade Organization, Parker said.

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