Toyota’s not going silently into a potential future where tariffs are as prevalent as man buns and tattoos in a brewpub. In its submission to the U.S. Commerce Department, Toyota wants the government to know it’s a standout business, and that a tariff on imported automobiles and auto parts would backfire.
Even for vehicles built in the U.S., American buyers would face a steep price hike, Toyota claims. Care to fork over an additional $1,800 for a Kentucky-built Camry? Meanwhile, a Canadian supplier association representative warns of “carmageddon” if the tariffs come to pass.
Toyota prepared the submission for hearings stemming from the Commerce Department’s investigation into whether auto imports represent a security threat to the United States (under section 232 of the Trade Expansion Act).
Hearing begin next month, with the investigation expected to wrap up in late July or August. Here’s Toyota’s statement in full:
A hundred and thirty-seven thousand Americans support their families working for Toyota, and Toyota and Lexus dealerships. They are not a national security threat. Indeed, Toyota operates 10 manufacturing plants in the U.S. We are an exemplar of the manufacturing might of America. A 25% tariff on automotive imports, which is just a tax on consumers, would increase the cost of every vehicle sold in the country. Even the Toyota Camry, the best-selling car in America, made in Georgetown, Kentucky, would face $1,800 in increased costs. We believe the only plausible outcome of this investigation is to reject the notion that automotive imports threaten national security.
Should NAFTA talks break down and the Trump administration follow through with the president’s threat to levy a 25 percent import tariff on foreign-built autos, expect larger price increases on other Toyota models — most significantly the Ontario-built RAV4, America’s best-selling non-pickup vehicle.
Toyota is just one of many companies speaking out against the proposed import duty. Automobile manufacturer associations, suppliers, and union leaders have piped up in opposition to the threats. North of the border, it’s getting pretty loud.
“A 25 per cent tariff on parts and cars would cause what we like to call ‘carmageddon’,” Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, told a Canadian House of Commons committee on Tuesday.
“The industry operates on single-digit margins and it would grind to an immediate halt with a 25 per cent increase in price.”
The committee’s main focus was on existing steel and aluminum tariffs, but the spectre of import duties on Canadian-built vehicles and auto parts loomed large. According to a Financial Post report, it isn’t just manufacturers losing sleep over the threats.
“Let me say this plainly. Steel and aluminum tariffs, while significant and negative for the retail automotive market, are minimum compared to the tsunami-like economic downturn that will occur should we be subjected to a 25 percent tariff or even lose NAFTA,” John White, chief executive officer of the Canadian Automobile Dealers Association, told the committee.
“In our view, the effects of the 2008-2009 economic situation would pale in comparison to what our members and the Canadian economy would face if we end up with a 25 per cent tariff on our cars.”
Across the river from America’s automotive heart, autoworkers and suppliers in Windsor, Ontario aren’t resting easy. Some 38,000 jobs are tied to the auto industry in that city, which builds engines for Ford and minivans for Fiat Chrysler.
“If they impose tariffs on those cars, companies will probably come after the workers to make up for the loss in profit and that’s the fear on the floor right now,” said Steve Morgan, an autoworker at FCA’s Windsor Assembly Plant, in an interview with CBC.
Unifor, a union representing Detroit Three autoworkers in Canada, has scheduled trade-related town halls in four cities.