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record. Since the end of the Great Reces- sion in 2009, U.S. automakers and parts suppliers have added 343,000 jobs.
Despite Trump’s threat, the auto trade war might not happen anytime soon, if at all. The president might be angling to use the tariffs to pressure the European Union to lower its own auto tariffs or prod Mexico to agree to a rewrite of the North American Free Trade Agreement more favorable to the United States.
“I’m hoping it’s just bluster,” said Paul Ritchie, owner of Honda and Kia deal- erships in Maryland and Pennsylvania. “I understand where the administration is coming from. Our trade imbalanc-
es should be corrected. I’m not sure you can take 25-30 years of neglect on trade imbalances and try to fix it in six months.”
Even if the auto tariffs aren’t just a ne- gotiating ploy, it could take time before they kick in: It took 10 months for the steel and aluminum tariffs — also justi- fied on national security grounds — to go from proposal to reality.
In targeting steel, aluminum and perhaps autos, the administration has weaponized an obscure provision of trade policy: The Trade Expansion Act of 1962 empowers a president to impose unlimited tariffs on particular imports
if the Commerce Department finds that those imports threaten national security.
The administration has defined na- tional security broadly, suggesting that anything that hurts U.S. economic com- petitiveness damages national security — “an argument you can apply to any industry you want,” noted Philip Levy, senior fellow at the Chicago Council
on Global Affairs and a former White House trade adviser.
Automakers, in the meantime, have warned that tariffs would raise their costs — and their customers’. In com- ments filed with the government, GM warned that that “increased import tariffs could lead to a smaller GM, a re- duced presence at home and abroad for this iconic American company, and risk less —not more — U.S. jobs.”
Even companies that build cars in America rely on imported parts that would be subject to the tariffs, thereby raising automakers’ costs.
“There is no automaker that has 100
percent exclusively U.S.-sourced parts,” said Brian Krinock, Toyota’s senior vice president for North American facto- ries. “It is a global business with global operations.”
Toyota manufactures nine models in the United States, all of which use some imported parts. About 30 percent of the Camry’s parts are imported, Krinock said, and a 25 percent tariff on those parts would raise the cost of a Camry by $1,800.
The Toyota Sienna, made in Princeton, Indiana, would be nearly $3,000 more expensive, he said, and the Tundra pick- up truck, made in San Antonio, Texas, would cost $2,800 more.
Car collectors, too, have written to Commerce to express their opposition to the tariffs.
“I have been a lifelong car enthusiast, and old cars pose no threat to national security. Neither do their parts,” wrote Mark Gillett of Dallas, urging Commerce to exempt cars and parts “of a certain age.”
Adam Posen, president of the Peterson Institute for International Economics, estimated that the tariffs would raise auto prices overall by 9 percent to as high as 21 percent for luxury models. They would cut the industry’s output 1.5 percent and cost 195,000 jobs, a Peterson analysis found.
Then there’s the threat of retaliation from U.S. trading partners. Toyota exports eight U.S.-made models to 31 countries; those exports could be hit by retaliatory tariffs, Krinock said.
Nearly 98 percent of the cars and trucks that would be hit by the tariffs are imported from U.S. allies: The European Union, Canada, Japan, Mexico and South Korea. If all those countries retaliated by slapping their 25 percent duties on U.S. car exports, it would deepen the impact on the U.S. economy and cost up to 1.2 million jobs in the United States, Posen estimated.
The Commerce Department origi- nally set two days of hearings about the proposed auto tariffs, but then cut that to one day. Posen said that cutting back on the time for industry representatives to testify suggests the administration already expects to impose the tariffs.
“This is something where they prede- termined the outcome,” he said.
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Krisher reported from Detroit. AP Writer Kevin Freking contributed from Washington.
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Follow Paul Wiseman on Twitter at https://twitter.com/PaulWisemanAP and Tom Krisher at https://twitter.com/ tkrisher
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