More automakers and suppliers are weighing in on President Trump's proposed 25 percent tariff on vehicle imports, breaking from the normal corporate practice of steering clear of contentious political issues. Toyota said such a tariff would add $1,800 to the cost of a Corolla, the top-selling car in the U.S. And the head of a major Canadian supplier said the tariffs would trigger a global recession eclipsing the 2009 financial collapse.
Trump has ordered the Commerce Department to investigate whether vehicle imports to the U.S. constitute a national security threat and should be subject to tariffs of 25 percent, and on Friday he floated the possibility of imposing 20 percent tariffs on EU-built vehicles. Commerce Secretary Wilbur Ross said he plans to complete his probe by late July or August and plans to hold two days of public hearings next month.
"A tariff is a tax, and it will be paid by American consumers," Mazda said in its statement. "It will significantly increase the cost of every new vehicle sold in America, regardless of where it is built. As Mazda begins construction of our new auto factory in Huntsville, Alabama, we urge the Commerce Department to reject the premise that auto imports are a threat to national security."
Mazda and Toyota are teaming on a new $1.6 billion plant in Alabama, where up to 4,000 workers were expected to produce about 300,000 vehicles a year — new crossovers from Mazda and Corollas for Toyota, which already operates a large engine plant in Huntsville.
Toyota released its own statement ahead of submitting it to the Commerce Department, which is accepting comments until June 29. It said, in part, that the 25 percent tariffs would add $1,800 to the Corolla's $19,620 starting price.
"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," Toyota said. "Indeed, Toyota operates 10 manufacturing plants in the U.S. We are an exemplar of the manufacturing might of America."
Meanwhile, the CEO of Linamar Corp., Canada's second-largest auto supplier with manufacturing sites in 11 countries including the U.S., told Automotive News the tariffs would be "unbearable" on top of Trump's newly announced tariffs on steel and aluminum imports. "Prices will have to be dramatically increased to consumers, consumers will stop buying, and we will have a collapse in the automotive market" that will be worse than the 2009 financial crash, CEO Linda Hasenfrantz told the publication.
In a separate analysis, Automotive News said Fiat Chrysler stands to lose as much as $866 million in annual profits under the proposed tariffs. FCA in 2017 exported 136,827 vehicles to the U.S. from the European Union, and specifically Italy, the publication reported, about two-thirds of which was the Jeep Renegade, which it builds in Melfi, Italy.
On Wednesday, major automotive trade groups representing both foreign and domestic automakers said the proposed tariffs would result in hundreds of thousands of lost U.S. jobs and harm the U.S. economy. The Alliance of Automobile Manufacturers, which represents the Detroit Three automakers, Toyota and others, said its analysis shows that a 25 percent tariff would result in an average price increase of $5,800.
The Commerce Department's own data show that the U.S. imported $42.8 billion worth of automobiles from the EU in 2017, compared to $46.9 billion from Mexico, $42.5 billion from Canada and $39.8 billion from Japan.