Car Industry

Automakers' warning to Trump: Tariffs will kill US jobs

The Trump administration's proposed 20 percent tariff on European-assembled cars has received a stiff rebuke from a pair of groups representing nearly all the world's manufacturers.

President Donald Trump meets with Tesla CEO Elon Musk at the White House.

In February 2017, President Trump met at the White House with executives including Tesla CEO Elon Musk.

Brendan Smialowski/AFP/Getty Images

Last week, President Donald Trump stated his intent to levy a 20 percent import tariff on all cars assembled in the European Union. Today, Reuters reports the threat received a stiff rebuke from two groups that, combined, represent nearly every major global automotive brand. The groups claim that the proposed tariffs would not only see a significant hike in price of the average new car, but would also cost hundreds of thousands of jobs and even slow the development of advanced safety technology.

The two groups are the Association of Global Automakers, which represents major brands like Toyota, Subaru, Nissan, Honda, Hyundai and Kia, plus many more, and the Alliance of Automobile Manufacturers, which covers Ford, General Motors, Fiat Chrysler, BMW, Mercedes-Benz USA and others. Together, this means nearly every major international marque, both large and small, is warning the Trump administration about the impact of the proposed tariffs -- a topic Elon Musk has questioned the president about as well.

The primary impact? Jobs. Many international companies like Toyota and Subaru have large manufacturing presences here in the US. The Association of Global Automakers states: "Rather than creating jobs, these tariffs would result in the loss of hundreds of thousands of American jobs producing and selling cars, SUVs, trucks and auto parts." Estimates for job losses range between 195,000 and 624,000, depending on whether other nations retaliate.

An additional threat is added cost to cars. The average amount of money spent on a new car in the US is approximately $34,000 and, according to the Alliance of Automobile Manufacturers, consumers would see a typical price hike of $5,800 on a new car. That will certainly reduce sales and drive consumers to buy lower-cost, lower-margin cars, reducing profits.

The final threat? A decrease of investment into advanced safety features like autonomy and new technologies like electrification. "The increased costs associated with the proposed tariffs may result in diminishing the US' competitiveness in developing these advanced technologies," said the Alliance of Automobile Manufacturers.

Investigations into import tariffs on European cars are currently ongoing by the Commerce Department. According to Reuters, US Commerce Secretary Wilbur Ross indicated that research will be concluded by July, at which point American consumers will know their fate.