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NADA to Trump: Fix trade imbalance concerns without auto tariffs

July 27, 2018
In testimony before the U.S. Department of Commerce, Peter Welch, the National Automobile Dealers Association president and CEO, urged the Trump Administration on July 19 to find ways to address "genuine trade concerns" without imposing auto tariffs that would only hurt American consumers and small businesses.
"The NADA recognizes the importance to the United States of leveling the trade playing field, eliminating unfair trade practices, and keeping America’s automotive industry strong," Welch said during a Department of Commerce hearing to examine potential tariffs on automobiles and auto parts. "But a 25 percent tariff applied to all imports would hurt auto manufacturers, dealers, consumers and the economy as a whole. And the hardest hit would be our customers."
As part of his testimony, Welch announced the findings of a new study by the Center for Automotive Research (CAR) — commissioned by the NADA — showing dramatic increases in vehicle prices and significant economic consequences arising from new auto tariffs, including a possible 25 percent tariff on all imported vehicles and auto parts.
The CAR study found that under a 25 percent tariff on all imports and parts, "consumers would see the price of the typical vehicle sold in the United States rise by $4,400. Prices of U.S.-assembled vehicles rise due to an increase in the cost of imported vehicle parts, adding $2,270 to the price. For the typical imported vehicle, these tariffs raise consumer prices by $6,875 per vehicle."
The CAR study, "Consumer Impact of Potential U.S. Section 232 Tariffs and Quotas on Imported Automobiles & Automotive Parts," also found that a 25 percent tariff would result in:
• 2 million fewer new vehicles sold annually.
• Total U.S. employment losses of nearly 714,700, and GDP losses of $59.2 billion.
• A loss of 117,500 of the 1.1 million U.S. new-car dealership jobs — 11 percent — with the average franchised dealership losing seven jobs.
• An increase in used car prices due to heightened demand and constricted supply.
• Increases in the cost of vehicle maintenance and repair due to higher automotive parts prices, "so even holding on to an existing vehicle will become more expensive."
 
Welch asked the Administration to "fully and carefully consider not only the new study we are submitting with my testimony, but all the data and analysis provided to the Department during this investigation."
"The average price of a new car already hovers around $35,000," Welch said. "According to Edmunds, in the past year interest rates on new car loans have risen 86 basis points and now average 5.82 percent — with more increases on the horizon. 
"The average monthly car payment for a new vehicle now stands at $533 per month with an average loan term of 69 months. Our customers are already strapped to make those payments. A $4,400 tariff on top of that would increase new car payments to $611 per month, and put the purchase of a new car out of the reach of many Americans."
Welch added: "New tariffs or quotas would also reduce competition and consumer choice, increase the cost of used vehicles, and raise the cost of getting vehicles serviced and repaired. As a nation, we can and should work together to address genuine trade concerns, without hurting American consumers and small businesses."
 
 

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