Auto Industry Cautions Trump That Tariffs Could Lead to Layoffs and Bankruptcies | Carscoops

      A collective letter from several automotive industry lobbying groups has been sent to President Trump, urging him to reconsider his plan for a 25 percent tariff on imported cars and parts.

      The groups caution that such a tariff could be detrimental, leading to job losses and possible bankruptcies for some businesses.

      On what Trump termed Liberation Day, he announced a comprehensive 25 percent tariff on any vehicle or component not produced in the United States, regardless of its origin. This declaration reverberated throughout the automotive sector, prompting a coalition of lobbying organizations to issue a serious warning in a letter directed to the U.S. administration.

      They contend that these tariffs could jeopardize jobs and businesses, with the risk of an adverse impact reminiscent of the pandemic still looming, according to the groups.

      The letter garnered signatures from numerous significant industry organizations representing nearly every automobile manufacturer in the nation, including General Motors, Toyota, Volkswagen, and Hyundai.

      The letter states, "Tariffs on auto parts will disrupt the global automotive supply chain and trigger a domino effect that will result in increased car prices for consumers, reduced sales at dealerships, and will complicate vehicle servicing and repairs, making them both more costly and unpredictable."

      It further warns, “Most auto suppliers lack the resources to handle a sudden disruption caused by tariffs. Many are already in financial distress and will face production halts, job cuts, and bankruptcies. The failure of just one supplier could halt an automaker’s production line, and, as was seen during the pandemic, this impacts all suppliers, resulting in job losses.”

      The coalition comprises the National Automotive Dealers Association, the Alliance for Automotive Innovation, the Motor & Equipment Manufacturers Association, among others. Collectively, they encompass every major U.S. automaker except Tesla, as well as auto suppliers and foreign manufacturers with operations in the U.S. This level of unity is unusual, according to Carla Bailo, CEO of ECOS Consulting LLC and former president of the Center for Automotive Research.

      "Typically, each organization would send out its own statement. The potential impact on all these industries is significant, ranging from aftermarket parts to original equipment manufacturers; thus, presenting a united front has more influence than acting separately. There is strength in numbers,” she explained to the Detroit News.

      The letter was addressed to Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and U.S. Trade Representative Jamieson Greer. It remains uncertain how, or if, Trump will respond to the letter. Last week, he mentioned that he was “considering something to assist some of the car companies. They are transitioning to parts manufactured in Canada, Mexico, and other places, and they require some time to start producing them domestically,” he remarked.

      If he does not yield to this pressure, the outcome will be interesting to observe. Some automakers have already ceased imports to the U.S., while others have indicated they will temporarily avoid price hikes. Volvo has already laid off hundreds of workers in anticipation of the tariffs, and car prices are on the rise.