Proposed tariffs on imported autos and imported auto parts could tip the U.S. auto industry into a recession, taking the rest of the U.S. economy with it
Tariffs could tip the U.S. auto industry into a recession, which in turn could threaten the rest of the U.S. economy, Smoke said. He said the likelihood of a recession rises to “above 50 percent” in early 2020.“This tariff produces in the vehicle market what in effect is a recession,” Smoke said. “That could be the tipping point that pushes the economy into a recession as well.”
Even assuming that in actual practice there would be some exclusions for the tariffs, and the final amount would probably average out to less than 25%, tariffs could reduce demand for U.S. new-vehicle sales by as much as 2 million units a year by forcing automakers to raise prices, Smoke said, citing an estimate from theThat would reduce U.S. auto sales to an annual rate in the 14 millions, down from the current forecast in the high-16 millions, Smoke said.
He said automakers could reduce their exposure to the tariffs by moving production to within the United States, but that takes time, and Smoke said there’s no way automakers in the U.S. could entirely eliminate imported parts. “There isn’t a single vehicle that doesn’t have parts from someplace in the world. So, it’ll be disruptive,” he said. The auto industry is lobbying hard against the proposed tariffs. Besides the effect on imports to the U.S. market, America’s trading partners have promised to retaliate withThe Trump Administration last year invoked “national security” concerns in proposing a 25-percent tariff on imported vehicles and imported parts. The U.S.
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