AUBURN HILLS, Mich. — Possible U.S. automotive tariffs may upend what has been a steady performance by the U.S. and global auto industry, according to some speakers at a forecast event today.
U.S. deliveries of cars and light trucks have been forecast to decline this year still run at historically high levels. The biggest uncertainty is whether a trade battles expand to include a fight over imported vehicles and parts.
“I’m a worry wart and this worries me a lot,” said Kristin Dziczek, vice president of industry, labor and economics for the Center for Automotive Research. CAR, based in Ann Arbor, Mich., held a program today in Auburn Hills, Mich. to discuss the industry’s outlook.
The U.S. Commerce Department sent a report late Sunday to President Donald Trump whether to impose tariffs on vehicles and parts for national security reasons. The findings weren’t disclosed and Trump has 90 days to consider the report.
Dziczek said Trump may go forward with auto tariffs as leverage for other trade negotiations.
“I think that’s what the administration wants to do,” she said. The CAR vice president likened such a move to taking out a loaded gun and putting “it on the table. It’s hard to decide whether this is the new normal or not.”
Automakers and suppliers have established international supply chains. Prices have already risen because of tariffs imposed last year on imported steel and aluminum.
“We see an affordability crisis for many Americans,” said Michelle Krebs, executive analyst for Autotrader. “That would accelerate if tariffs went into effect.”
However, one automaker economist sounded a more cautionary note.
Elaine Buckberg, chief economist for General Motors Co., said it’s too early to make predictions about new tariffs. “We have to wait and see.”
The possibility of auto tariffs comes amid high trade tensions generally. The U.S. and China have paused a trade war while they negotiate ways to address their differences. The U.S., Canada and Mexico last year reached a new trade pact to update the North American Free Trade Agreement. However, the new accord has yet to be ratified, adding uncertainty to the mix.
U.S. sales of cars and light trucks have exceeded 17 million each of the past four years. Excluding the effect of new auto tariffs, analysts expect the figure will dip slightly below the 17 million mark in 2019, a rate that would still enable automaker profits.
“There will be some sort of softening but not a cliff,” said Joe McCabe, president of AutoForecast Solutions LLC.
The industry still is benefitting from an expanding U.S. economy.
“You see a consumer that is relatively healthy,” said Mike Wall, executive director of automotive analysis for IHS Markit. “There are some headwinds that are growing.”