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Dealer to Senate committee: Cars are not a national security threat

October 5, 2018
A third-generation dealer told the U.S. Senate Finance Committee Sept. 26 that the proposed 25 percent tariff on imported automobiles and auto parts is misguided because the items don’t pose a threat to the country’s national security.
Steve Gates, principal of the Gates Auto Family, with dealerships in Kentucky, Indiana and Tennessee, said dealers would be harmed by the tariffs in a market where costs are rising and sales are flattening. It also would hurt consumers.
"Over the past 20 years," Gates said, "the cost of a new car has increased by 35 percent, while household income has only grown 3 percent. A 25 percent tariff would make this already difficult situation truly impossible for many middle class families."
Gates, a director of the American International Automobile Dealers Association, said: "I’ve been in this business my whole life. I may not be an expert on politics or global security, but I know cars. And I know the cars and trucks I sell, the services I provide, and the taxes I pay, are not a national security threat."
All of the witnesses at the hearing — with the exception of the representative of the United Auto Workers, who supported the use of tariffs in a narrow and targeted way — strongly opposed the auto tariff imposition.
Sen. Orrin Hatch, R-Utah, chairman of the Finance Committee, appeared sympathetic to Gates’ argument. "The Peterson Institute calculates that auto tariffs could cause 195,000 workers to lose their jobs … and that’s before other countries retaliate, which could put over 600,000 U.S. jobs at risk. These tariffs could cost the U.S. auto industry up to 2 million lost vehicle sales annually," Hatch said.
Raising tariffs and taxes usually is Congress’s job, but responsibility for national security tariffs rests with the executive branch. By branding the proposed auto tariffs as national security matters, President Donald Trump can bypass Congress to enact them.
"It is very difficult to understand how a tariff on imported vehicles and parts would improve national security, but quite clear how it would actually harm our economic security," Gates said in testimony.