The American Automotive Policy Council (AAPC) further expressed their fierce opposition to President Trump’s recently announced trade agreement with Britain. They write that this deal “represents the biggest threat to the U.S. auto industry in the last 50 years.” The AAPC’s membership includes most major automakers, including General Motors, Ford, and Chrysler-parent Stellantis. They understandably fear the deal’s potential negative impact on American manufacturers and workers.
The agreement also permits British automobile manufacturers to ship 100,000 cars per year to this country. Their imports will enjoy a tariff rate that is only 10%. This quota almost exactly equals the number of vehicles that Britain sold to the United States last year. It is an important indicator of a new and potentially transformative moment in trade politics. The AAPC argues that this deal might erode the competitive edge of U.S. automakers.
The AAPC has been sounding the alarm on the impending tariff cuts on Japanese auto imports. These cuts may even go as low as 15%, deepening the worries about the British deal. This is in stark contrast to the 25% tariffs that are still in effect for any vehicle imported from Canada and Mexico. The council contends that these kinds of differences in tariff rates can hurt American manufacturers.
Matt Blunt, AAPC’s head, explained the group’s newly-found pro-transparency position in the following way, as a matter of principle.
“Any deal that charges a lower tariff for Japanese imports with virtually no U.S. content than the tariff imposed on North American built vehicles with high U.S. content is a bad deal for U.S. industry and U.S. auto workers.”
While we are still disappointed by the limited scope of negotiations, AAPC is nonetheless carefully considering the terms of this agreement. The organization promotes continued study to better understand its impacts before establishing a clear position. The trade deal is part of a larger trend. As we’ve noted, President Trump has threatened to go as high as 25 percent with tariffs on Mexico and Canada. Further, President Trump on August 1 threatened to increase the tariffs on imports from Mexico to 30% and imports from Canada to 35%.
In April, Trump directed his administration to reduce the impact of the proposed auto tariffs. He suggested reducing or eliminating duties on components and materials but maintained the 25% tariffs on imported cars. This approach was intended to give some relief to U.S. manufacturers who were contending with increased costs from tariffs themselves.
Kush Desai, another voice in the discussion, heralded the trade deal with Britain as a breakthrough for American automakers, asserting it would “put an end to Japan’s unfair auto trade barriers for American-made cars.” This view is completely at odds with the issues flagged by the AAPC. They express concern about the potential negative impacts to U.S. industry.