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As the threat of a trade war with a number of auto-producing nations looms, interest groups are sounding the alarm that U.S. employees and consumers would be hurt first and foremost if the threatened 20 or 25 percent tariffs go into effect. Specifically, dealer groups are warning that up to 2 million new-vehicle sales could be lost as prices for some vehicles skyrocket, inevitably slowing down dealership traffic and forcing layoffs of dealership staff, according to Automotive News.
As 9,600 import-branded dealerships in the U.S. employ 577,000 workers, the loss of business and layoffs would be massive by any measure.
The most vulnerable automakers would be the ones that do not have significant U.S. assembly lines. Mercedes-Benz, Volkswagen and BMW, which produce most of their SUVs and crossovers in the U.S. for the North American market, would be protected to some degree when it comes to any tariff scenario. Overall, German automakers produce just over half the cars they sell in the U.S. locally: 657,000 vehicles were exported from Germany to the U.S. last year, Reuters reported, compared with 804,000 that were produced here. Out of the German automakers, it would be Audi and Porsche facing the brunt of the tariffs since they don't have U.S. factories, while Mercedes-Benz and BMW would stand to see half of their lineups hit by tariffs -- sedans tend to be produced overseas.
But what about Japanese automakers?
Bloomberg reports Japanese automakers are in a better position to weather the tariffs since they produce roughly twice as many vehicles in the U.S. as they import. Japanese automakers started making vehicles in the U.S. earlier than the Germans, beginning in the 1980s. As Japanese sedan sales started to crowd out American sedans, local production was logical and essential. By 2017, they produced a combined 3.8 million cars here, up from 296,569 in 1985, as Bloomberg points out. In 2017 alone, Japanese automakers imported 1.7 million cars to the U.S. -- not an insignificant number -- but still less than half of the total number of cars they sold in the U.S.
Still, there is reason for worry as tariffs are expected to affect even the prices of cars produced by Japanese automakers here in the U.S.
"Tariffs would have a serious negative impact on the U.S. economy," the Japan Automobile Manufacturers Association said in a statement filed with U.S. Department of Commerce. "Tariffs on imported automobiles and automotive parts would have a serious negative impact on American families and jobs. Studies estimate that tariffs could increase the price of an imported $30,000 car by about $6,400 and cause up to 195,000 U.S. workers to lose their jobs. Tariff retaliation from trading partners could result in more than 600,000 U.S. jobs lost."
In urging the U.S. Department of Commerce and the Trump Administration to drop the threat of tariffs, JAMA also argued that the national security basis for the sanctions was nonexistent.
