Trump Approach on Nafta Relieves Automakers’ Worst Fears

With American consumers flocking to roomier sport utility vehicles, Ford will stop selling the Fiesta, the Fusion and other sedans in its home market. On Friday, the company said it would also cancel plans to import a Focus crossover from China because the Trump administration was considering imposing tariffs on an additional $200 billion of imports from that country. The president has also said he wants to place a 25 percent duty on cars and car parts.

Other companies might not have that choice. Although sales of the Jetta and the Golf have fallen about 40 percent this year, they are two of Volkswagen’s top-selling models in the United States. Honda has a lot riding on the HR-V, which is built in an $880 million plant in Mexico that opened in 2014.

“The HR-V is doing really well for us,” said Adam Silverleib, vice president of Silko Honda, a dealership in Raynham, Mass. Losing the model “would definitely hurt.”

Some companies could find it harder to meet fuel-economy standards if they got rid of smaller cars. The Trump administration is trying to roll back those standards, though court challenges could prevent a resolution of the issue for years.

While fears about the scrapping of Nafta have eased somewhat, automakers are still concerned about Mr. Trump’s plans for higher tariffs on cars and car parts. The president has argued that auto imports pose a threat to national security, a rationale he used to raise tariffs on steel and aluminum imports.

Ms. Dziczek of the Center for Automotive Research said those higher tariffs would significantly increase costs and would thus be much more damaging than the terms of the preliminary agreement with Mexico. Even vehicles made in the United States would be affected because many include imported parts.

Her firm estimates that a 25 percent tariff on imported cars — excluding those made in Mexico and Canada — would increase prices of vehicles made in North America by $1,135; imported models would cost $3,980 more.

As a result, the center estimates, annual auto sales would fall by 1.2 million vehicles and the industry would lose 197,000 jobs.

Article source: https://www.nytimes.com/2018/08/31/business/economy/autos-nafta-trump.html?partner=rss&emc=rss