WASHINGTON -- A procession of industry group and foreign government representatives lined up Thursday to oppose President Donald Trump's proposed tariffs on autos and auto parts.
The Commerce Department held the hearing as it investigates whether imports of passenger vehicles imperil U.S. national security.
In testimony on Thursday morning, Jennifer Kelly, the director of research development at the United Automobile Workers union, said that American workers had been harmed by decades of offshoring of auto production, and that a comprehensive investigation into the effect of foreign cars and car parts on domestic manufacturing was "long overdue."
"We caution that any rash actions could have unforeseen consequences, including mass layoffs of American workers," Kelly said, adding "but that doesn't mean we should do nothing."
In May, the Commerce Department said it would investigate whether auto imports threaten U.S. national security, by reducing domestic research and development in cutting-edge technologies. The investigation is just one of many trade measures the administration has taken as it tries to revive U.S. manufacturing, a key campaign promise of Trump. The administration has already imposed tariffs on steel and aluminum and, on Wednesday, said it would begin another security-related investigation into uranium.
But the potential size of the auto tariffs would dwarf those other measures. While the Trump administration has imposed tariffs on around $48 billion of steel and aluminum imports, the new tariffs could be levied on roughly $351 billion of automobile and auto part imports.
American steel producers and steelworker unions lobbied for the metals tariffs, giving Trump political cover to add duties on foreign shipments.
"This one is much more of an uphill climb for the administration," said Edward Alden, a senior fellow and trade expert at the Council on Foreign Relations in Washington. "We're starting to see the damage from the steel and aluminum tariffs and the various retaliations. The impact of this action is so much larger than those that the opposition is going to be far better mobilized and far stronger."
Commerce Secretary Wilbur Ross opened the hearing seeking to dispel the notion that the Trump administration has made up its mind. His department received nearly 2,300 written submissions from industry groups, unions, foreign governments and individuals commenting on the investigation.
"It's clearly too early now to say if this investigation will ultimately result in a Section 232 recommendation on national security grounds, as we did earlier with steel and aluminum," Ross said. "But President Trump does understand how indispensable the U.S. automobile industry is."
The stakes are high for the world economy and the global auto industry. In recent weeks, investors have been focused on the potential effect of U.S. tariffs on Chinese imports. But tariffs on car imports could do even more damage -- more than double the amount of all other U.S. tariffs already implemented or proposed, according the International Monetary Fund.
Taxes on imported cars would further strain relations with allies such as Germany and Canada. The president is scheduled to meet European Commission President Jean-Claude Juncker next week as Europe pushes for a global deal to cut auto tariffs.
The EU is preparing a new list of American goods to hit with protective measures if Juncker's mission to Washington fails to persuade Trump to forego tariffs on cars. The bloc may target American goods worth about 20 percent of the U.S. action, according to two officials with knowledge of the deliberations.
EU Trade Commissioner Cecilia Malmstrom said Thursday that the 28-nation bloc would be forced to respond if Trump escalates trade tensions with the auto tariffs. They would come on top of tariffs the U.S. put on steel and aluminum imports, which the EU responded to with duties on U.S. products.
"If the U.S. would impose these car tariffs that would be very unfortunate," said Malmstrom. She said the EU was preparing "a list of rebalancing measures there as well. And this we have made clear to our American partners."
Canada's government also warned that it will hit back if the U.S. imposes tariffs on imports of Canadian automotive products.
Kirsten Hillman, Canada's deputy ambassador to the U.S., said Canada will be "forced to respond in a proportional manner" if the U.S. imposes auto levies.
With midterm elections in Congress looming in November, Republicans are pleading with Trump to avoid duties on cars. In a letter released Wednesday, 149 lawmakers from both parties urged the administration to drop the car investigation, arguing that imports don't pose a security risk.
Last month, Trump threatened to add tariffs of 20 percent on all cars coming into the U.S. from the European Union. On a trip overseas last week, the president called the EU a "foe" on trade issues. His latest criticism of the EU came Thursday.
"The European Union just slapped a Five Billion Dollar fine on one of our great companies, Google. They truly have taken advantage of the U.S., but not for long!" Trump tweeted on Thursday.
An auto-trade war would be a body blow to automakers from General Motors to Toyota, which have fine-tuned their supply chains to take advantage of countries with low duties, such as the U.S. America's trade in cars and car parts with the rest of the world amounted to more than $470 billion last year. The nation imported about $135 billion more in passenger cars than exported.
Industry groups are stepping up efforts to sway the president. This week, a coalition of groups representing most major automakers said in an open letter to Trump that duties on cars and car parts "would be a massive tax on consumers who buy or service their vehicles -- whether imported or domestically produced."
"These higher costs will inevitably lead to declining sales and the loss of American jobs, as well as increasing vehicle service and repair costs that may result in consumers delaying critical vehicle maintenance," the group said.
The Commerce Department has until February next year to report its findings. The president has the final say on any tariffs. The investigation covers imports of automobiles, including SUVs, vans and light trucks, and auto parts.
Information for this article was contributed by Andrew Mayeda, Ryan Beene, Gabrielle Coppola, Mark Niquette and Viktoria Dendrinou of Bloomberg News; Ana Swanson of The New York Times; and Raf Casert of The Associated Press.
A Section on 07/20/2018