Tariff Threat Divides Detroit's Blue and White Collars

(Bloomberg) -- Blue-collar auto workers are getting behind President Donald Trump’s latest threat against car imports, but the suits in America’s car capital doubt a crackdown will come to pass.

“I welcome the fact that they’re investigating this,” United Auto Workers President Dennis Williams told reporters Thursday in Detroit. “The United States became a dumping ground for a lot of countries at a very low cost.”

Tariff Threat Divides Detroit's Blue and White Collars

The union leader voiced his support a day after Trump teased “big news,” then proceeded to order his Commerce Department to investigate whether imported cars pose a national security threat. The trade group that represents General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV’s interests in Washington is dubious that the probe will give the president’s administration cover to implement tariffs or limit imports, which would be allowed under a section of 1960s trade law.

“We are confident that vehicle imports do not pose a national security risk to the U.S.,” the Alliance of Automobile Manufacturers said in an emailed statement. The group’s members also include Mazda Motor Corp. as well as Germany’s BMW AG and Daimler AG’s Mercedes-Benz.

GM, Ford and Fiat Chrysler have yet to issue statements of their own in response to the Trump administration’s investigation. Japan’s Toyota Motor Corp. said Thursday that it “seems implausible” that imported cars pose national security concerns. Germany’s Volkswagen AG said any tariffs would make the U.S. auto industry less competitive, threaten job growth and make vehicles costlier for consumers.

“This is a case where everybody gets hurt and some get hurt less bad than others,” said Kristin Dziczek, an industry and labor analyst for the Center for Automotive Research. “It’s not like it’s just the Detroit Three versus everybody else. One of the most American cars that is sold here is the Toyota Camry.”

The Trump administration has invoked Section 232 of the Trade Expansion Act, which gives the U.S. president the power to impose tariffs on imports that imperil national security. Used sparingly by previous administrations, Trump used it earlier this year to impose tariffs on imported steel and aluminum.

The UAW’s Williams said economists and others in the Washington establishment class “are free traders to the detriment of our country,” adding that “American workers have been handed the short stick for a long time.”

Those comments were reminiscent of the cryptic tweet Trump sent hours before the White House and Commerce Department announced their investigation Wednesday.

“After many decades of losing your jobs to other countries, you have waited long enough!” Trump wrote in reference to “great” American auto workers. On Thursday, he told reporters that his administration was “restoring our forgotten communities by fighting to reclaim the stolen manufacturing jobs.”

The Section 232 investigation drew swift condemnation from U.S. auto dealers, Republican senators in Washington and politicians and lobbying groups from Germany to Japan.

“These types of actions when done in the past have invited retaliation by our trading partners, which by the way, jeopardizes the 2 million vehicles we export from the United States all around the world,” John Bozzella, the president of the Association of Global Automakers, whose members include Honda Motor Co. and Kia Motors Corp., said in an interview.

Roughly half of the vehicles assembled in the U.S. are produced by international car companies that have “put down roots” in the country, Bozzella said.

“Frankly, I don’t believe the Honda Accord is a threat to U.S. national security,” Representative Jeb Hensarling, a Texas Republican, told reporters.

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