Business

Tariffs will drive car prices up ‘dramatically,’ AutoNation CEO says

A man looks at the sticker price of a pickup truck on display at the State Fair of Texas in Dallas on Monday, Oct. 9, 2017. (Associated Press)

Auto prices in the United States will rise “dramatically” if the Trump administration imposes tariffs, AutoNation Chairman and CEO Mike Jackson said Wednesday.

“Automotive tariffs will make steel tariffs look like a company picnic. This will unleash a real trade war. The numbers are so much bigger. It will raise prices dramatically for consumers in the United States. It will be inflationary,” Jackson said.

Jackson’s comments on CNBC followed an automotive trade group saying it will tell the Trump administration that a U.S. threat to impose a tariff of up to 25 percent on imported passenger vehicles would cost American consumers $45 billion annually, or $5,800 per vehicle.

Jackson, who leads the nation’s largest auto retailer, based in Fort Lauderdale, Florida, said he thought the Trump administration would have embraced Europe’s recent offer to go tariff-free.

He said BMW produces more vehicles in the United States at its plant in South Carolina than it sells, exporting primarily to China.

“BMW’s bold step to manufacture very complex vehicles in the Southeast led to Mercedes-Benz and Volkswagen building plants in Tennessee. The Germans should be congratulated for their investment in the United States. So it’s a bit of a head-scratcher to threaten BMW with tariffs,” Jackson said. “The Europeans are already doing what you want. You want to punish them for doing what you want?” he said.

The Alliance of Automobile Manufacturers – a group representing General Motors Co., Toyota Motor Corp., Volkswagen AG and other major automakers – said it will file comments with the U.S. Commerce Department this week, according to a report Tuesday by Reuters.

“Nationwide, this tariff would hit American consumers with a tax of nearly $45 billion, based on 2017 auto sales. This would largely cancel out the benefits of the tax cuts,” spokeswoman Gloria Bergquist told the wire service. Consumers would also face higher costs of imported auto parts when buying vehicles from both U.S. and foreign automakers, she said.

In March, Trump ordered steep tariffs on imported steel and aluminum from every country except Canada and Mexico. Last week, Trump threatened a 20 percent tariff on cars imported from the European Union unless it removes import duties and other barriers to U.S. goods.