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Automotive study says tariffs spell disaster for U.S.

National Public Radio

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 $455-$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 493,600-2 million vehicles, resulting in the loss of 82,000 to nearly 750,000 auto manufacturing jobs losses.

The U.S. economy would contract $6.4 billion-$62.2 billion, while the 17,000 new vehicle dealerships in the United States could see revenues decline $16.3 billion-$66.5 billion and result in the loss of 28,800-117,500 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 percent and 25 percent tariffs applied to all imports, exemptions for Canada and Mexico, quotas equaling 80 per cent of 2017 import volumes applying to all imports and exempting the NAFTA partners.

In 2017, 52 percent of vehicles sold in the U.S. were manufactured domestically. The Big Three and Tesla plants produced 29 percent of vehicles sold.

Nearly one in four vehicles sold were produced by international firms with factories in the United States. The remaining 48 percent 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.

The Associated Press is one of the largest and most trusted sources of independent newsgathering, supplying a steady stream of news to its members, international subscribers and commercial customers. AP is neither privately owned nor government-funded; instead, it's a not-for-profit news cooperative owned by its American newspaper and broadcast members.
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