The auto industry has been adding jobs in the United States for several years. In July, more than 972,000 people worked for car and parts companies, 40,000 more than a year earlier, according to the Bureau of Labor Statistics. Manufacturers have added more than 300,000 jobs since 2009, when General Motors and Chrysler needed a government bailout to survive.
And while a half-dozen auto plants have been built in Mexico in the last decade, new plants are going up in the United States, too. Volvo, the Swedish carmaker, is building a factory in South Carolina that the company says will employ 4,000 people by 2021. Toyota and Mazda recently agreed to jointly build a plant in Alabama.
”In some ways,” said Charlie Chesbrough, a senior economist at Cox Automotive, the new trade rules amount to ”a solution in search of a problem.”
But some industry associations are not as sanguine. The Motor and Equipment Manufacturers Association, which represents parts makers, is worried about a side agreement that the Trump administration reached with Mexico that could be used to cap duty-free auto imports from that country in the future.
That side deal ”may serve to decrease American manufacturing jobs and exports and put U.S. businesses at a global disadvantage — all while increasing costs to consumers,” the association said in a statement.
The Mexican government has said about 30 percent of the cars now exported to the United States do not meet the requirements of the new agreement. They include popular compact models like the Honda HR-V, the Volkswagen Jetta and Golf, the Nissan Sentra, and the Ford Fiesta and Fusion.
If manufacturers can’t find enough North American parts for those Mexican-made cars, they could still import them into the United States by paying a 2.5 percent tariff. That would force companies to either raise prices or accept smaller profit margins, or some combination of the two.
Another option is to stop selling those noncompliant vehicles in the United States. Some small cars are already set to go away.
With American consumers flocking to roomier sport utility vehicles, Ford will stop selling the Fiesta, the Fusion and other sedans in its home market. On Friday, the company said it would also cancel plans to import a Focus crossover from China because the Trump administration was considering imposing tariffs on an additional $200 billion of imports from that country. The president has also said he wants to place a 25 percent duty on cars and car parts.
Other companies might not have that choice. Although sales of the Jetta and the Golf have fallen about 40 percent this year, they are two of Volkswagen’s top-selling models in the United States. Honda has a lot riding on the HR-V, which is built in an $880 million plant in Mexico that opened in 2014.
”The HR-V is doing really well for us,” said Adam Silverleib, vice president of Silko Honda, a dealership in Raynham, Mass. Losing the model ”would definitely hurt.”
Some companies could find it harder to meet fuel-economy standards if they got rid of smaller cars. The Trump administration is trying to roll back those standards, though court challenges could prevent a resolution of the issue for years.
While fears about the scrapping of Nafta have eased somewhat, automakers are still concerned about Mr. Trump’s plans for higher tariffs on cars and car parts. The president has argued that auto imports pose a threat to national security, a rationale he used to raise tariffs on steel and aluminum imports.
Ms. Dziczek of the Center for Automotive Research said those higher tariffs would significantly increase costs and would thus be much more damaging than the terms of the preliminary agreement with Mexico. Even vehicles made in the United States would be affected because many include imported parts.
Her firm estimates that a 25 percent tariff on imported cars — excluding those made in Mexico and Canada — would increase prices of vehicles made in North America by $1,135; imported models would cost $3,980 more.
As a result, the center estimates, annual auto sales would fall by 1.2 million vehicles and the industry would lose 197,000 jobs.
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