The U.S. economy and the U.S. auto industry have been on a roll. GDP growth in recent quarters is at a rate of over 3 percent. Cuts in unnecessary and antiquated regulations are encouraging innovation. Tax reform has spurred corporate investment and increased payrolls. The auto industry continues to invest in the U.S. with 14 companies building cars across the country today. This number will reach 15 when the joint venture between Toyota and Mazda begins producing vehicles in Alabama in 2021. Companies from Detroit, to Ohio, to Silicon Valley are investing heavily to win the global race to deliver the next generation of automated and carbon free mobility. Today, seven million people owe their livelihoods to these developments.
You'd think policymakers in Washington would want to preserve this progress, and keep the engine turning.
If so, you'd be wrong.
Certainly the renegotiations of the North American Free Trade Agreement (NAFTA) and the Korea-US Free Trade Agreement (KORUS) pose major risk to the U.S. auto industry. We make over a million more cars and trucks a year in the U.S. today than we did the year NAFTA went into effect and exports of U.S.-made vehicles to Korea have INCREASED in value by 366 percent under KORUS. As negotiations continue under both, we’re working to ensure that these agreements will maintain this progress.
Add to this uncertainty and risk the imposition of an extensive regime of steel and aluminum tariffs now being considered by the president. These tariffs will, without question, inflict damage on the U.S. auto industry. It should surprise no one that car makers consume huge amounts of steel and aluminum. It also shouldn’t surprise anyone who can remember 2002 just how bad this idea really is.
When President Bush imposed tariffs on imported steel in 2002, these actions were arguably taken to support a domestic steel industry during a period of restructuring. But, the U.S. economy lost more jobs in steel-consuming industries than existed at the time in the entire U.S. steel industry. Prices went up, and our trading partners responded with tariffs on exports of U.S. goods and produce so extreme and extensive the Bush Administration reversed its course and eliminated the steel tariffs well before their scheduled sunset.
Today, the Trump administration argues tariffs are necessary to protect our national security. That's just hard to imagine given the materials that go into our ships, submarines, and fighter jets today.
By imposing these broad tariffs, and risking successful trade agreements, we'd be trading away the benefits of tax and regulatory reform through a self-defeating stab at protectionism which recent history clearly shows will raise prices, kill American jobs and provide importers with a huge competitive advantage. As Yogi Berra used to say, “you could look it up.”