Photo: AFP/Geoff Robins
Photo: AFP/Geoff Robins

A US auto industry group, which represents 12 carmakers including Ford, General Motors and Fiat Chrysler, said on Thursday that proposed tariffs on auto imports would harm US economic security.

“Economic security is national security,” the Alliance of Automobile Manufacturers wrote in comments submitted to the US Commerce Department, ahead of a hearing on the proposed trade action.

“We believe the resulting impact of tariffs on imported vehicles and vehicle components will ultimately harm US economic security and weaken our national security. The potential negative ramifications of such tariffs to the nation’s auto industry, consumers, and overall U.S. economy are real,” the letter said.

The group cited studies on the impact tariffs would have on the US economy, warning the Trump administration about “substantial job losses.”

A 25-percent tariff on imported vehicles and vehicle components would result in a 1.5 percent decline in production and cause 195,000 US workers to lose jobs over a 1- to 3-year period or possibly longer, according to the Peterson Institute for International Economics. Their analysis estimates that if other countries retaliate with tariffs, then American job losses would likely increase to 624,000.”

“The calculus is simple,” the group argued. “Tariffs will lead to increased producer costs, increased producer costs will lead to increased vehicle costs, increased vehicle costs will lead to fewer sales and fewer tax receipts, fewer sales will lead to fewer jobs, and those fewer jobs will significantly impact many communities and families across the country.”

According to industry sources, the Trump administration is hoping to complete an investigation into the national security implications of auto imports ahead of midterm congressional elections to be held in November. The investigation is the basis for the proposed tariffs.

“It makes sense because the president knows that congressional Republicans don’t want to challenge him just ahead of the election,” one industry source told Inside US Trade. “So, the best time for him to announce new tariffs is right before the election so they won’t push.”