The U.S. Would Share in the Pain of Auto Tariffs

Sep 11, 2018 | 09:30 GMT

A Fiat Chrysler plant in Michigan displays auto body parts.

Automakers around the world are worried about the fallout of prospective U.S. tariffs on imported vehicles, but the United States would feel some of the strongest effects of the measures.

(Bill Pugliano/Getty Images)


  • U.S. tariffs on imported vehicles and their components, possibly coming in the next six months, would drive up prices for cars and light trucks on the domestic market.
  • Heavy tariffs would raise U.S. auto prices in general, but automakers that rely on imported vehicles would be hit hardest. 
  • The tariffs would erode sales of more affordable vehicles produced outside North America by companies such as Hyundai, Volkswagen and BMW and could stall these companies' plans to expand their U.S. market share until at least the mid-2020s. 
  • Considering domestic political factors, including the next presidential election in 2020, the current administration may choose less disruptive options, such as exempting NAFTA members from tariffs.

The prospect of U.S. tariffs on automotive imports is looming large in the minds of carmakers around the globe, but the United States itself would feel some of their biggest effects. If the U.S. Department of Commerce determines that auto imports harm national security, then the White House can erect additional trade barriers -- tariffs on finished vehicles and perhaps their components -- that would raise prices for U.S. consumers. Depending on their severity, the fees could put hundreds of thousands of U.S. workers out of work, largely in automobile retail. But the fallout could be short-lived. The approach of the 2020 presidential vote would force President Donald Trump's administration to find a balance between its trade goals and the economic pain facing consumers and workers. By then, the administration may have gotten enough concessions from its partners in trade deals to opt for lighter tariffs -- or forgo them...

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