'America does not go to war in a Ford Fiesta'

'America does not go to war in a Ford Fiesta'

Global Automakers oppose proposed Trump Administration tariffs on imported vehicles.

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Photo illustration of a potential Ford Fiesta military vehicle.

Cleveland, Ohio – The U.S. auto industry is thriving and has more capacity to produce weapons of war than at any time in the nation’s history, the Association of Global Automakers argued in a filing with the U.S. Department of Commerce, opposing President Donald Trump’s proposed tariffs on imported vehicles.

“America does not go to war in a Ford Fiesta,” the organization argued in regulatory filings, countering Trump’s claims that foreign car imports hurts national security. Ford imports the Fiesta from Cuautitlán, Mexico.

Trump has ordered Commerce Secretary Wilbur Ross to explore steep tariffs on imported cars using a trade provision intended to ensure U.S. access to munitions. Trump and Ross used the same provision to impose tariffs on imported steel and aluminum earlier this year.

The national security argument gets tougher with imported cars, Global Automakers argue, because automotive production capacity is near record highs.

“Every U.S. production facility in the industry would be available in a national emergency, and every one of the 130,000 Americans who work for international automakers can be counted on as well,” the organization argues. “They are no less patriotic or willing to serve their country in a time of crisis than any other Americans. They have taken good jobs with companies that have invested billions of dollars in the United States, based on those companies’ appreciation for America’s legal tradition of openness and fair treatment for all. Virtually all of these companies are based in countries that are strong allies of the United States, and that have stood by the United States for decades.”

The argument against alienating allies is not likely to sway the administration – it had no impact when allied European, Canadian, and Mexican governments made similar arguments regarding aluminum and steel.

However, the Alliance also argues that the tariffs could lead to job losses.

“The cost to U.S. jobs from the import duties alone would be 195,000 jobs, with U.S. auto and auto parts industries shedding 1.9% of their labor force, according to the Peterson Institute for International Economics,” Alliance economists argued in the filing. “Both imports and exports would be reduced, according to the study, with U.S. production falling 1.5%. These job losses would increase significantly in the very likely event that our trading partners were to impose the same tariffs on U.S. exports of these goods. In that scenario, U.S. production would fall 4%, and 624,000 Americans would lose their jobs. The impact on exports would exceed that on imports.”

Dennis Hayes, U.S. director of automotive supplier Mitchell Plastics, a company with plants in Michigan, Indiana, and Alabama, filed a separate letter opposing the tariffs, saying they could impact the company’s 800 jobs.

“We have invested millions of dollars since 2004 in our local communities while manufacturing parts for the US Assembly Operations of Ford, General Motors, Fiat Chrysler, Toyota, Volkswagen, Nissan, Honda, Hyundai, and Kia,” Hayes said in his filing. “We support sourcing locally and the great majority of our input purchases are made with US based suppliers. However, in some cases, we have no choice but to import components and materials that are not available in the U.S.”

He adds that if tariffs raise his costs, “we will have no choice but to pass these higher costs on to our customers, increasing the price of domestic vehicles. I believe that this will negatively affect consumer choice and affordability, driving down U.S. auto sales which are currently near all-time high levels and threatening the prosperity of the communities in which my team members live and work.”

More than 1,800 comments have been filed with the Commerce Department regarding its imported cars and car parts investigation, the overwhelming majority of which oppose the action.

A handful of car collectors have expressed support for the concept of industry tariffs in general but have asked the Trump Administration to exempt imported parts for classic vehicles, parts often hard to find in the U.S.

The Department is accepting feedback until June 29, 2018, and will accept rebuttals to filings through July 13, 2018.

About the author: Robert Schoenberger is the editor of Today's Motor Vehicles and a contributor to Today's Medical Developments and Aerospace Manufacturing and Design. He has written about the automotive industry for more than 18 years at The Plain Dealer in Cleveland, Ohio; The Courier-Journal in Louisville, Kentucky; and The Clarion-Ledger in Jackson, Mississippi.

rschoenberger@gie.net