Trump has said he imposed the tariffs to help correct the trade imbalance between the United States and China and to force action on Chinese trade practices he calls unfair. But the tariffs are not slowing imports of auto parts from China, says Kristin Dziczek, vice president of industry, labor and economics at the Center for Automotive Research in Ann Arbor, Mich.
To the contrary, she says, parts imports from China continued to grow each month last year compared with 2017 even after the tariffs were initially imposed. CAR calculates that auto parts imports from China to the United States rose 15.5 percent in 2018 over the previous year.
U.S. tariff policy "slowed imports of vehicles from China and slowed exports of vehicles and parts to China," Dziczek says. "It did not slow imports of parts from China."
CAR did not have figures or projections for replacement parts imports from China for 2019. Overall, Dziczek says, the China tariffs "have added about $200 to the cost of manufacturing a vehicle. For some cars, that is the entire profit margin."
Sourcing from a country without a tariff won't work, Dziczek adds. Under a separate set of tariffs called Section 232, all U.S. imports of aluminum and steel were taxed, but some countries, including Australia, were exempted. When suppliers bought more of these products from Australia to avoid tariffs, she notes, imports from Australia surged and the Trump administration called on the Australian government to control the imbalance.
"It is like squeezing a balloon," Dziczek says. "It is going to come out somewhere else."
In any case, she says, the parts price increase will hit everyone equally: "There is not a way to arbitrage it."
Doug LaCroix, fixed operations director at Red McCombs Automotive, a dealership group in San Antonio, predicts the impact of the parts tariff on dealership service departments will be "minimal and temporary. Everyone will be in the same boat, whether you are large or small."
Red McCombs Automotive has seven new-vehicle dealerships as well as several body shops and used-car stores. The group also sells about $1.5 million a month worth of automaker-branded parts to dealers in south and central Texas, LaCroix says.