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Trump tariffs would cause vehicle prices to soar, wipe out jobs: report

The Canadian Press   

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The study found U.S. auto production can't quickly increase, taking at least a year to convert an under-utilized plant and on average two years to build a new assembly facility.


An automotive study says U.S. tariffs on imported vehicles and auto parts would cause the price of new vehicles to soar, wipe out tens of thousands of American jobs and take a big chunk out of the country’s gross domestic product.

The Center for Automotive Research says U.S. consumers would see the price of new vehicles rise by US$455 to US$6,875 depending on the level of tariff or quota, where the vehicle was assembled and if Canada and Mexico were exempted.

It estimates auto demand will fall by between 493,600 to two million vehicles, resulting in the loss of 82,000 to nearly 750,000 auto manufacturing jobs losses.


The U.S. economy would contract by between US$6.4 billion and US$62.2 billion.

The 17,000 new vehicle dealerships in the United States could see revenues decline by US$16.3 billion to US$66.5 billion and result in the loss of 28,800 to 117,500 dealer jobs.

Used vehicle prices would also rise as more consumers turn away from new purchases and the selection of cheaper imports would likely be reduced as manufacturers decided to no longer offer some models.

The center evaluated six scenarios, including 10 and 25 per cent tariffs applied to all imports, exemptions for Canada and Mexico, quotas equalling 80 per cent of 2017 import volumes applying to all imports, and exempting the NAFTA partners.

In 2017, 52 per cent of vehicles sold in the U.S. were manufactured domestically. The Big Three and Tesla plants produced 29 per cent of vehicles sold. Nearly one in four vehicles sold were produced by international firms with factories in the U.S.

The remaining 48 per cent were imported, with more than half assembled in Canada or Mexico containing significant U.S. content.

The study found U.S. auto production can’t quickly increase, taking at least a year to convert an under-utilized plant and on average two years to build a new assembly facility.

Consumer preferences for trucks, SUVs and CUVs complicate production decisions since U.S. plants making these models are already running at full capacity.

The report was issued on the same day as the U.S. Department of Commerce held a hearing on whether the imports of automobiles and automotive parts threaten U.S. national security.


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