Pub. 9 2019 Issue 1

19 American auto parts makers don’t have capacity to build all the parts domestically that are currently imported. Most imported auto parts are made in Mexico and other low-wage countries. So the automakers will probably pay the tariffs and pass along much of the cost. Policy Council, a lobbying group that represents the three Detroit automakers. American auto parts makers don't have capacity to build all the parts domestically that are currently imported. Most imported auto parts are made in Mexico and other low- wage countries. So the automakers will probably pay the tariffs and pass along much of the cost. "Nobody wins in this tariff scenario. Nobody's jobs are saved," said Rebecca Lindland, analyst with Cox Automotive. "Everything is going to get more expensive." More expensive cars could mean fewer sales — a drop of 1 million to 2 million vehicles, according to the American Automotive Policy Council. That means US auto plants would probably produce fewer cars and cut jobs. Used cars could become more expensive, too. If people are forced out of the new-car market, used car demand — and prices — will rise, according to Lindland and Krebs. The exact increase in auto prices can't yet be known. Every car has a different mix of parts, and the exact amount of tariffs has not been announced. Automakers may absorb some of the cost to maintain sales. But estimates show vehicle costs will be significantly higher. The cost of a car with 35% impor ted par ts would increase by $2,000 with a 25% tariff on parts, according to the American Automotive Policy Council. Toyota (TM) estimates the cost of the Camry, which is built in its plant in Kentucky and is the nation's best- selling sedan, would rise by $1,800 from the parts tariffs. And General Motors (GM) has warned tariffs could force the company to cut jobs at US plants due to an expected drop in sales associated with higher prices. 