Auto industry pleads against new Trump tariffs

Auto workers rally on Capitol Hill in Washington, DC, against US President Donald Trump's proposed tariffs on auto imports and the impact on auto makers and their surrounding communities. (AFP/MARK WILSON)

The pleas came as the European Union said it hoped to defuse the trade dispute next week in Washington but was preparing to retaliate should those efforts fail.

Citing national security concerns, the Trump administration in May called for an investigation into auto imports and proposed to increase tariffs to up to 25 per cent on vehicles and parts.

Economists warn the measures, coming on top of a host of other tariffs, and retaliation from US trading partners, could harm the global economy.

The overwhelming majority of industry representatives appearing at a Commerce Department hearing said the tariffs would cause job losses, damage the economy, make the industry less competitive and price many Americans out of the auto market.

Former Missouri governor Matt Blunt, head of the American Automotive Policy Council, which represents big three US automakers Ford, General Motors and Fiat Chrysler, said the domestic industry was "very concerned" tariffs would undermine benefits from December's sweeping corporate tax cuts.

He said "there is no evidence that automotive imports pose a threat to our national security."

Since the spring, Trump has launched trade wars with European, Asian and North American trading partners, showing particular disdain for lopsided tariffs he said allow imported autos into the United States but keep US-produced vehicles out of foreign markets.

The Commerce Department has been collecting public comments on the proposal, which have been overwhelmingly opposed, and is not expected to present its findings to the White House for about two months.

Trump also invoked the national security justification to impose steep tariffs on steel and aluminium imports, angering key allies.

The US imported US$212 billion in autos last year, US$151 billion more than it exported, a deficit that has risen 29 per cent since 2013, according to Commerce Department figures.

Despite overwhelming opposition to the auto duties, Commerce Secretary Wilbur Ross said the administration was not obliged to heed those views.

"This is not a plebiscite," he told CNBC early on Thursday, adding that he was not surprised the opposing voices dominate since "The affected parties are the ones who will likely give testimony."

EU PREPARED TO RETALIATE

Meanwhile in Brussels, EU Trade Commissioner Cecelia Malmstrom said the EU would "think out of the box" in a bid to find a solution, but she warned officials were preparing to respond with what she called "rebalancing measures" should the US follow through with the auto tariffs.

An EU source told AFP the retaliatory levies could be worth €10 billion (US$11.5 billion).

Next week, Malmstrom will accompany European Commission chief Jean-Claude Juncker to Washington, as he tries to persuade Trump to drop steel and aluminium tariffs and avoid duties on cars.

Several participants at the hearing in Washington said the proposed tariffs would weaken domestic investment, notably in the efforts to develop technologies such as electric and autonomous vehicles.

"Imports help drive innovation. They help drive production," said Linda Dempsey of the National Association of Manufacturers, a major Washington lobby group.

"They also help us keep higher value manufacturing here."

Peter Welch, head of the National Automobile Dealers Association, said industry research shows the measures would cause 715,000 job losses.

In addition, the tariffs could slice nearly US$60 billion off GDP, reduce sales by two million units and raise monthly auto loan payments.

"Our customers are already strapped to make those payments," he said.

Ann Wilson, a lobbyist for the Motor & Equipment Manufacturers Association, said if US automakers were denied access to low-cost labour in other markets, they would lose out to Asian and European manufacturers.

"If we are not able to have access to that, we are no longer going to be able to be globally competitive," she said.

The United Auto Workers trade union stood out as a lone voice of support, but warned that "rash actions" could be harmful.

Jennifer Kelly, the UAW's research director, said the US auto trade deficit more than doubled in the last 20 years, while there are fewer US autoworkers and fewer domestically-produced vehicles than in 2000.

"We know that the automotive industry is a global industry with long, complicated, well-established supply chains," she said.

"We caution that any rash actions could have unforeseen consequences, including mass layoffs of American workers," she added. "That doesn't mean we should do nothing."