President Of Global Automakers Group Discusses How Tariffs Will Affect The Industry

Mar 8, 2018
Originally published on March 8, 2018 9:43 pm
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ARI SHAPIRO, HOST:

Many U.S. manufacturers who use steel and aluminum are unhappy with the president's tariff announcement today, including automakers. John Bozzella is president and CEO of the Association of Global Automakers. It's a group of international companies like Nissan, Toyota and Honda that build their cars in the U.S. His members operate more than 30 manufacturing facilities here. Thanks for coming into the studio today.

JOHN BOZZELLA: Thanks for having me.

SHAPIRO: What's your reaction to the president signing these tariffs?

BOZZELLA: Well, this is very concerning. You know, history tells us that these tariffs will raise prices on hardworking Americans who need to buy cars and trucks among other things that have a lot of steel and aluminum in them. History also tells us that these will create a competitive disadvantage for American auto manufacturers by raising the costs of steel here in the United States. Also, I think these tariffs are going to invite retaliation from our trading partners, which will jeopardize automotive exports. So we're very concerned.

SHAPIRO: You say this may raise prices for hardworking Americans who want to buy a car. How much are we talking about?

BOZZELLA: Well, you know, you think about it, 25 percent of the value of a car is steel. So, you know, you're talking about - in a $30,000 car you're talking about a substantial amount of steel and aluminum that goes into this car. I think anybody who's been in a car recognizes that, you know, these are very significant steel and aluminum-intensive things. So we're talking about a substantial - potential substantial price increase here.

SHAPIRO: You mentioned the threat of retaliation. I understand of the cars that your automakers build here in the U.S. about 20 percent are exported, around a million cars every year. How would retaliation affect that?

BOZZELLA: Yeah, think about it. So we - as a whole industry we export 2 million vehicles a year. International car companies export a million vehicles a year from American plants built by Americans. So what would happen is if we have retaliation - let's think about what we've already heard. Potential retaliation from Europe - 350,000 of those exports are to Europe. And so think about it this way - excuse me; 250,000. That's about a whole plants' worth of production for an entire year. So that's 4,000 or 5,000 people working in a plant for an entire year. Those products now become less competitive. And what we - we need to have more exports. We need more trade and lower taxes and lower tariffs.

SHAPIRO: Your members are mostly international companies that operate in the U.S. with headquarters overseas. Do you worry that this move might encourage those companies to pull back their U.S. manufacturing footprint?

BOZZELLA: Well, you know, these car companies are all operating globally. Cars are made everywhere, which means cars can be made anywhere. And I think it's important to recognize that the most important thing we could be doing right now is making sure that the U.S. has a competitive manufacturing platform so we can compete with countries all around the world. This is a very competitive business. We need to compete with production centers in Europe and Asia. And we need to win that competition. We were winning with NAFTA. We need to keep NAFTA. And I'm concerned that these tariffs will create problems for that competitiveness.

SHAPIRO: Do you think these companies are going to shrink their U.S. footprint if these tariffs go through?

BOZZELLA: Yeah, I think it's too early to tell. I think we have to understand exactly what - how the process plays itself out, whether other countries are exempted, how the U.S. government reacts to concerns about whether that's - the steel they need, the specialty products they need, are even available - made in the U.S. So I think there's still a lot of questions. And that's the main thing. We're creating a tremendous amount of uncertainty at a critical time for the auto industry.

SHAPIRO: Just in the few seconds we have left, what is your next move? Jeff Flake, Republican senator of Arizona, has said he's going to introduce a bill that would nullify these tariffs. Are you going to lobby Congress, try to get the White House to change its mind? Where do you go from here?

BOZZELLA: We're going to continue to talk to Congress. We're going to talk to governors from auto-making states and make sure that we understand the implications here. It's significant. It's concerning. And I think we need to channel that into a better response to the concerns the administration has.

SHAPIRO: So you're not taking this as a fait accompli.

BOZZELLA: No. We need to keep working at this.

SHAPIRO: All right, John Bozzella is president of the Association of Global Automakers, a group of foreign car companies with significant operations here in the U.S. Thanks for coming in and talking with us today.

BOZZELLA: Thanks, Ari. Transcript provided by NPR, Copyright NPR.