{"id":137006,"date":"2019-06-05T11:50:31","date_gmt":"2019-06-05T15:50:31","guid":{"rendered":"http:\/\/www.thedetroitbureau.com\/?p=137006"},"modified":"2019-06-05T11:50:31","modified_gmt":"2019-06-05T15:50:31","slug":"trump-trade-wars-could-backfire-hitting-american-jobs","status":"publish","type":"post","link":"https:\/\/thedetroitbureau.com\/2019\/06\/trump-trade-wars-could-backfire-hitting-american-jobs\/","title":{"rendered":"Trump Trade Wars Could \u201cBackfire,\u201d Hitting American Jobs"},"content":{"rendered":"
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The looming tariffs on products from Mexico ordered by President Trump has auto executives concerned.<\/figcaption><\/figure>\n

With less than a week left before President Donald Trump\u2019s proposed new tariffs on Mexican imports go into effect, auto industry officials are worrying about the potential impact on prices, sales, production and jobs, with at least one industry veteran warning such a move could \u201cbackfire\u201d and worsen the current market downturn.<\/p>\n

The proposed 5% tariffs, which would cover everything from agricultural products consumer electronics \u2013 as well as around $100 billion in cars and car parts \u2013 will go into effect on June 10, and then steadily escalate before reaching 25% by October. But there is growing opposition coming from Republican leaders in Congress, Senate Majority Leader Mitch McConnell this week said, \u201cThere is not much support in my conference for tariffs, that\u2019s for sure.\u201d<\/p>\n

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News Now!<\/figcaption><\/figure>\n

About 2.6 million Mexican-made vehicles worth around $93 billion were shipped to the U.S. last year, with nearly $10 billion in car parts also crossing the border. Since some of those parts show up in almost all vehicles assembled in the States, the tariffs would have an impact on virtually every American car buyer. But the potential is there for U.S. auto workers to also feel the brunt.<\/p>\n

U.S. car sales have fallen by nearly 3% for the first five months of 2019, and automakers have already begun trimming back production, especially at plants producing slower-selling passenger car models. General Motors announced around 14,000 job cuts last November, with two U.S. assembly plants closing. Ford is trimming 7,000 jobs, with no plant closures, it said last month.<\/p>\n

(Auto stocks take a beating as industry prepares for Mexican tariffs. <\/em>Click Here<\/a><\/span>\u00a0for the story.)<\/em><\/strong><\/p>\n

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Trump sprung a new tariff on Mexico, announcing it on Twitter.<\/figcaption><\/figure>\n

The situation could get significantly worse, however, according to a number of industry insiders and analysts. The planned tariffs set to go into effect next week could force prices on a vehicle like the Chevrolet Silverado or Ram 1500 to jump $1,500 or more, a figure climbing to $7,500 by October. For a luxurious Audi Q5 built near Puebla, that could top $10,000 before the end of the year. And even American-made vehicles using parts like Mexican wiring harnesses could see price hikes of hundreds, and even thousands, of dollars.<\/p>\n

That\u2019s a serious problem at a time when industry data shows new car prices averaged about $34,000 in May, according to Carla Bailo, president and CEO of the Center for Automotive Research.<\/p>\n

\u201cYou\u2019re seeing a lot of companies curbing spending\u201d as they begin to cope with the sales downturn and worry about what Trump\u2019s broader trade strategy might mean, said Bailo. The danger for the administration, she added, is that this could \u201cbackfire\u201d and actually cost American manufacturing jobs if higher prices sent sales into a tailspin.<\/p>\n

That was echoed by a statement from the Volkswagen Group just before the president last month announced he would delay by up to six months a decision on a Commerce Dept. report that declared foreign-made automobiles a threat to national security. The president now has another six months to decide whether to implement tariffs of up to 25% on vehicles from sources like Germany, Britain, Italy and Japan.<\/p>\n

(<\/em>Click Here<\/a><\/span>\u00a0for more on the impact of the Mexican tariffs.<\/em><\/strong>)<\/em><\/strong><\/p>\n

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President Donald Trump surprised Mexico by slapping a new tariff on the country in an attempt to stem illegal immigration.<\/figcaption><\/figure>\n

\u201cWe believe that tariffs of this kind are a tax on the U.S. consumer and will result in higher prices and also threaten job growth,\u201d VW said. The company had planned to expand its big assembly plant in Tennessee by adding the production of two new battery-electric vehicles there. But they would rely on parts from Europe, among other places and, the company added, its plans \u201cwould be impaired by restrictive changes to trade.\u201d<\/p>\n

The auto industry is at ground zero in Trump\u2019s trade battles. Ford and General Motors each said they spent about $1 billion more than expected on imported aluminum and steel last year. Automakers responded positively when, on May 17, the White House rolled back that tariff on metals from Canada and Mexico.<\/p>\n

\u201cWe are pleased that the U.S., Canada and Mexico have reached an agreement that will help us as a region,\u201d Joe Hinrichs, Ford\u2019s president of automotive operations, told TheDetroitBureau.com.<\/p>\n

But the threatened tariffs on Mexico could create major new headaches, disrupting what Steve Kiefer, global purchasing chief at General Motors, called \u201ca well-tuned supply base\u201d built up over the past three decades under NAFTA. \u201cThat would have to change on short order,\u201d said Kiefer, though, in reality, it would be difficult to shake that network up anytime soon.<\/p>\n

(Trump\u2019s \u201cnational security\u201d tariffs could be blocked by WTO.\u00a0<\/em>Click Here<\/a><\/span>\u00a0for more.)<\/em><\/strong><\/p>\n

For now, GM is asking its suppliers \u201cnot to do anything and be calm,\u201d Kiefer saying he is hoping for \u201ca resolution\u201d before the tariffs take effect.<\/p>\n","protected":false},"excerpt":{"rendered":"

With less than a week left before President Donald Trump\u2019s proposed new tariffs on Mexican imports go into effect, auto industry officials are worrying about the potential impact on prices, sales, production and jobs. At least one industry veteran warns the move could \u201cbackfire\u201d and worsen the current market downturn. See the story at TheDetroitBureau.com.<\/p>\n","protected":false},"author":2,"featured_media":135151,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","footnotes":""},"categories":[7,8,5],"tags":[],"make":[],"post-state":[],"category_old":[150,151,123,173,282,299,132,284,125,297,139,172,288],"acf":[],"_links":{"self":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts\/137006"}],"collection":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/comments?post=137006"}],"version-history":[{"count":0,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts\/137006\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/media\/135151"}],"wp:attachment":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/media?parent=137006"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/categories?post=137006"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/tags?post=137006"},{"taxonomy":"make","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/make?post=137006"},{"taxonomy":"post-state","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/post-state?post=137006"},{"taxonomy":"category_old","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/category_old?post=137006"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}