Report: Car makers to warn Trump against $60b tax

Car makers have warned against proposed US import tariffs which could shock the automotive industry. 

Seeking to protect US jobs and encourage manufacturers to build cars within the US borders, President Trump has telegraphed plans for a dramatic increase in tariffs for vehicles assembled outside the US.

Reuters reports the Alliance of Automobile Manufacturers will warn Trump that US customers will be hit with $US45 billion ($60b) in new taxes under his scheme.

A statement released by the alliance last week said tariffs are “not the right approach” to US reforms.

“Tariffs raise vehicle prices for our customers, limit consumer choice and invite retaliatory action by our trading partners,” it said.

“Automakers support reducing trade barriers across the board and achieving fairness through facilitating rather than inhibiting trade.”

The US government opened an investigation surrounding imported vehicles in May “to determine their effects on America’s national security”.

President Trump told the New York Times that “core industries such as automobiles and automotive parts are critical to our strength as a nation,” an opinion not shared by Australian counterparts before the closure of Ford, Toyota and Holden plants in Victoria and South Australia.

The US President has previously pointed out the number of Mercedes-Benz vehicles in New York compared to the paucity of US-built Chevrolet vehicles in Germany, tweeting in January 2017 that “Car companies and others, if they want to do business in our country, have to start making things here again. WIN!"

If implimented, such a policy has the potential to reduce the profitability of carmakers, which could have a flow-on effect for future models. While the US hopes new taxes encourage companies to create jobs inside America, the European Union could respond to the proposed measures with like-for-like taxes damaging US export business.