Trump Voters May Be the Biggest Losers From Trump’s Auto Tariffs

A new factory operated by Volvo Cars near Ridgeville, S.C. Carmakers, both foreign and domestic, say President Trump’s proposed tariffs would damage their supply lines, interfere with exports and eventually force them to curtail operations in Republican strongholds.

BRUSSELS — President Trump has complained about seeing too many German cars on Fifth Avenue, and threatened heavy tariffs on the companies that produce them. There is a good chance, though, that those Mercedes-Benzes and BMWs were not only made in the United States, but made by workers who voted for Mr. Trump.

European companies have turned Alabama, South Carolina and Tennessee into auto manufacturing powerhouses in recent years, churning out cars not just for American buyers but also for export to China and Europe. Germany’s three biggest carmakers all have facilities there, and Volvo Cars, which is owned by a Chinese company but based in Sweden, began producing at a new plant in South Carolina just last month.

Yet being major employers in regions that voted heavily for Mr. Trump has not protected them.

With barely a peep of resistance from his own party, the president has threatened tariffs — expected to be 20 percent — on imported cars and car parts. In a prelude to such a move, he has ordered an investigation into whether the imports pose a threat to national security. Trade restrictions could be put in place within months. And if he follows through, the European Union has pledged to retaliate.

The damage would be far-reaching, draining an estimated $14 billion from the United States economy. If other countries retaliated, the cost would skyrocket to nearly $300 billion, the European Union’s Washington delegation said last week.

Carmakers, both foreign and domestic, say such penalties would severely damage their lines of supply, interfere with exports and eventually force them to curtail operations in, of all places, Republican strongholds.

Mr. Trump won 63 percent of the vote in Spartanburg, S.C., home of BMW’s biggest factory anywhere in the world. But Allen Smith, president of the Spartanburg Area Chamber of Commerce, said the president’s tariffs would threaten the region’s livelihood.

“For BMW and its many, many suppliers scattered across the state and region, you’re talking tens of thousands of jobs,” Mr. Smith said. “We would all agree with the president’s overall aim to improve trade with America’s interests top of mind. But getting to that end by inflicting so much pain on American business is the wrong approach.”

Mr. Trump’s threat to impose auto tariffs would be the latest manifestation of his willingness to alienate longtime allies and American companies, ostensibly to protect domestic jobs. He has already imposed levies on steel and aluminum from the European Union, Canada, Mexico and other nations, and on Friday will place tariffs on $34 billion worth of Chinese products.

But this new front in the trade war carries substantial risk not just for the auto industry but for Mr. Trump and Republican officeholders nationwide, given the impact that a full-blown trade war could have on American jobs tied to the auto industry.

Virtually all cars made in the United States contain imported parts. Unlike steel and aluminum tariffs, whose costs may not be obvious to most consumers, automotive levies would show up in showrooms within weeks. Sticker prices would rise by hundreds if not thousands of dollars. That is why Ford and General Motors, alongside foreign automakers, have also roundly condemned the protectionist measures.

“The times are gone that a producer was only headquartered in one country with production in that country and exporting from that country to the rest of the world,” said Erik Jonnaert, the secretary general of the European Automobile Manufacturers’ Association, in an interview in Brussels.

The economic impact would be greatest in a triangle demarcated by BMW’s factory in Spartanburg; Daimler’s Mercedes complex in Tuscaloosa, Ala.; and Volkswagen’s plant in Chattanooga, Tenn.

Beginning in the 1990s, Southern states, desperate to replace manufacturing jobs lost when the textile industry decamped to Asia, wooed carmakers with tax breaks and other sweeteners. When Volkswagen was looking for a place to build a factory in 2008, Chattanooga officials deployed 200 bulldozers, wood chippers and other heavy equipment to clear a potential site after company representatives complained that it was too overgrown. The factory began operating in 2011.

Over time, the European carmakers have expanded their operations in those regions not only to build vehicles for American buyers, but also to serve customers in places like China. Last year, Daimler added 900 jobs to its American operations, which also include truck factories, and it is investing $1 billion to expand the Tuscaloosa operation to produce electric vehicles and batteries.

Mr. Trump’s contention that these companies may present a threat to American national security, though, has thrown that growth into doubt.

BMW exports 70 percent of the vehicles that it makes in Spartanburg, about 270,000, helping to reduce the trade deficit that Mr. Trump often complains about. BMW plans to add 1,000 jobs in Spartanburg as part of a $600 million expansion. If trade tensions continue to escalate, BMW warned in a letter on June 28 to Wilbur Ross, the commerce secretary, the result could be “strongly reduced export volumes and negative effects on investment and employment in the United States.”

That argument is unlikely to carry much weight with Mr. Trump. BMW and Mercedes export “millions” of cars to the United States, Mr. Trump said in a speech in June, “and we hardly tax them at all.”

Countries across the globe charge varying tariffs on certain types of automobiles. The United States imported about 1.2 million cars of all brands from Europe last year — five times as many as were sent the other way — and imposed a relatively low tariff of 2.5 percent. The European Union charges a levy of 10 percent on car imports from the United States and other countries.

But tariffs on larger vehicles are lopsided in the other direction. The United States charges a 25 percent tariff on light trucks and vans from Europe, effectively barring them from the American market. That’s one reason Volkswagen vans made in Hanover, Germany, once synonymous with 1960s flower power, are a rare sight on American roads these days.

Mr. Trump’s tariffs would also apply to car parts, adding another layer of disruption to the companies that supply automakers across the world — especially if Europe retaliates.

Suppliers like ZF Friedrichshafen, a German company that has a transmission factory in South Carolina, say they produce most of what they need locally. But occasionally ZF imports or exports niche products when the market is too small to justify having more than one production site.

“We are vulnerable to further escalations of this conflict because we ship products from the U.S. to Europe and from Europe to the U.S.,” Wolf-Henning Scheider, the chief executive of ZF Friedrichshafen, said in an emailed statement.

Automakers and their suppliers have met with officials and lawmakers of both parties in recent weeks to share their concerns. And companies ranging from GM and Toyota to small suppliers have submitted testimony, much of it critical, in preparation for a public hearing on the tariffs on July 19 and 20 in Washington.

“I’ve been in the industry for over 20 years, and I’ve never seen a more united and aligned response than this one,” said John Bozzella, the president of Global Automakers, which represents foreign automakers operating in the United States.

So far, Republican elected officials have largely left the carmakers to fend for themselves on tariffs. But the threat of tariffs on industries that support about 5 percent of private-sector jobs in the United States could finally prod lawmakers to act.

Legislation introduced by Senator Bob Corker of Tennessee that would curtail the president’s authority to impose tariffs because of national security has failed to advance, but the idea still has powerful backers. Senator Orrin G. Hatch of Utah, chairman of the Finance Committee, who has called the proposed levies “deeply misguided,” said he planned to move legislation on tariffs through his committee. And representatives including Jackie Walorski, a Republican from Indiana, and Ron Kind, a Democrat from Wisconsin, have gathered more than 70 signatures for a letter expressing concern about the potential impact of the tariffs on the automotive industry.

Ann Wilson, the senior vice president for government affairs at the Motor and Equipment Manufacturers Association, which represents auto parts makers, said her group had met with Mr. Trump’s economic advisers, staff at the Treasury and Commerce Departments, and lawmakers of both parties to convey the dire impact that tariffs could have on the industry.

Many smaller manufacturers of auto parts, especially those whose costs have risen because of steel and aluminum tariffs, would not be able to last even three months with a substantial tariff on imports, she said.

“What is going to play out in the industry is higher costs, lower employment and a massive disruption that could ultimately result in an economic downturn for the country,” Ms. Wilson said.

Mr. Trump has shown no signs of backing down.

When asked in an interview on Fox News last weekend about his threats of a 25 percent tariff on all imported vehicles, Mr. Trump responded: “Well, actually it’s 20 percent. Tell them to get their numbers right.”

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