Trade Briefing: Consumer Impact of Potential U.S. Section 232 Tariffs & Quotas on Imported Automobiles & Automotive Parts

The U.S. Department of Commerce is currently investigating whether U.S. automobiles and automotive parts constitute a national security threat under Section 232 of the Trade Expansion Act of 1962, as amended. The Center for Automotive Research (CAR) estimates that consumers will see the price of all new vehicles rise by $455 to $6,875 depending on the level of tariff or quota, where the vehicle was assembled, and whether the policy provides exemptions for automotive trade with Canada and Mexico. Used vehicle prices will also rise due to heightened demand and constricted supply, and higher automotive parts prices will drive up the price of vehicle maintenance and repair, so even holding on to an existing vehicle will become more expensive.

U.S. automotive and automotive parts manufacturers would not benefit from tariff or quota protection since all vehicles produced in the United States rely on imported content and a substantial share of U.S.-produced automotive parts and components are exported for assembly in vehicles built in other countries. CAR estimates that automotive demand will fall by between 493,600 to 2 million vehicles as a result of the implementation of tariffs or quotas. Declining demand is associated with employment losses ranging from over 82,000 to nearly 715,000 jobs and a $6.4 billion to $62.2 billion hit to U.S. Gross Domestic Product (GDP).

This briefing covers the economic, trade, employment, output, and price impacts of the potential Section 232 tariffs or quotas at a range of levels and levied against all trading partners or all non-NAFTA trading partners.

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