Border Tax Would Cause ‘Calamity,’ Says NADA President

NEW YORK – Auto dealers, many of whom threw their support to fellow entrepreneur Donald Trump’s successful presidential run, are virtually united against his proposed border tax proposal.

The pushback is evident at the 2017 Automotive Forum, staged by the National Automobile Dealers Assn. and J.D. Power in conjunction with the New York International Auto Show.

The proposed legislation would levy up to 20% on imports in an effort to create jobs for Americans. But auto-retailing industry leaders say it would hike vehicle prices to the detriment of U.S. consumers.

“I’m not sure Washington gets it yet,” NADA Chairman Mark Scarpelli says of the tax suggestion that could particularly affect vehicles made in Mexico and shipped to the U.S. Virtually all major automakers run Mexican assembly plants.

“We’re still in the early stages of tax reform; we still have a lot of work to do,” he tells the conference audience. “But this tax proposal poses a serious threat to vehicle affordability.”

NADA President Peter Welch notes enacted legislation for a border tax is far from inevitable. “It’s just a blueprint of an idea.”

He adds, “The president has stated his preference for tariffs and more jobs in the U.S., and it seems like every day there’s another press release put out about adding new jobs here.

“But the auto industry truly is a global business,” Welch says, noting the logistical difficulties of relocating auto and auto-supply production from one country to another. “It’s just not going to happen.”

He describes dealers as the proverbial canaries in a coal mine who are the first to sense a problem.

“They know their customers and their desire for an array of vehicle choices at affordable prices,” Welch says. “If the net result (of a border tax) increases prices by as much as $1,700, which is one figure I’ve seen, it would create an economic calamity like we’ve never seen before. And customers would revolt.”

Welch speaks at a panel discussion on government affairs. Fellow panelist John Bozzella, president and CEO of trade group Global Automakers, says a border tariff would indirectly impose a levy on American consumers.

“We support tax reform, but raising taxes to lower taxes, and affecting what dealers sell, continue to be a concern,” he says.

[email protected]