February 22, 2019

Trump Voters May Be the Biggest Losers From Trump’s Auto Tariffs

Virtually all cars made in the United States contain imported parts. Unlike steel and aluminum tariffs, whose costs may not be obvious to most consumers, automotive levies would show up in showrooms within weeks. Sticker prices would rise by hundreds if not thousands of dollars. That is why Ford and General Motors, alongside foreign automakers, have also roundly condemned the protectionist measures.

“The times are gone that a producer was only headquartered in one country with production in that country and exporting from that country to the rest of the world,” said Erik Jonnaert, the secretary general of the European Automobile Manufacturers’ Association, in an interview in Brussels.

The economic impact would be greatest in a triangle demarcated by BMW’s factory in Spartanburg; Daimler’s Mercedes complex in Tuscaloosa, Ala.; and Volkswagen’s plant in Chattanooga, Tenn.

Beginning in the 1990s, Southern states, desperate to replace manufacturing jobs lost when the textile industry decamped to Asia, wooed carmakers with tax breaks and other sweeteners. When Volkswagen was looking for a place to build a factory in 2008, Chattanooga officials deployed 200 bulldozers, wood chippers and other heavy equipment to clear a potential site after company representatives complained that it was too overgrown. The factory began operating in 2011.

Over time, the European carmakers have expanded their operations in those regions not only to build vehicles for American buyers, but also to serve customers in places like China. Last year, Daimler added 900 jobs to its American operations, which also include truck factories, and it is investing $1 billion to expand the Tuscaloosa operation to produce electric vehicles and batteries.

Mr. Trump’s contention that these companies may present a threat to American national security, though, has thrown that growth into doubt.

BMW exports 70 percent of the vehicles that it makes in Spartanburg, about 270,000, helping to reduce the trade deficit that Mr. Trump often complains about. BMW plans to add 1,000 jobs in Spartanburg as part of a $600 million expansion. If trade tensions continue to escalate, BMW warned in a letter on June 28 to Wilbur Ross, the commerce secretary, the result could be “strongly reduced export volumes and negative effects on investment and employment in the United States.”

Article source: https://www.nytimes.com/2018/07/03/business/trump-auto-tariffs.html?partner=rss&emc=rss

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