Trump dangles auto tariffs in Europe trade talks, but carmakers aren’t happy

President Donald Trump is considering new tariffs on foreign cars and auto parts, but some of the strongest opposition is coming from the industry they are meant to protect: American automakers.

In theory, the big three – Fiat Chrysler, General Motors and Ford – could stand to benefit if tariffs are put on foreign vehicles. But they aren’t asking for the tariffs, which carmakers argue would raise the price of vehicles made in the United States and hurt sales.

“I’m not aware of any company, organization or entity that broadly supports the imposition of these tariffs,” said former Missouri Republican Gov. Matt Blunt, who represents the three big American automakers as president of the American Automotive Policy Council.

The President, however, loves to dangle the threat of tariffs in international negotiations. He only this week backed off a threat to radically hike tariffs on consumer goods imports if he can’t get a comprehensive trade deal with Beijing by March 1.

On Wednesday, during an appearance at the White House alongside visiting Austrian Chancellor Sebastian Kurz, Trump indicated that he might impose auto tariffs if he isn’t happy about trade talks with the European Union.

“It’s something we think about and we’re negotiating with them. If we don’t make the deal we’ll do the tariffs,” Trump said.

But every corner of the auto industry – vehicle makers, part manufacturers, and dealers – have lined up against the proposed levies since Trump first asked for an investigation into whether imported vehicles and parts pose a threat to national security last year. The Commerce Department on Sunday delivered its findings, which could give the President the legal justification to impose the tariffs. The report has yet to be made public, but Trump has 90 days to make a decision.

Trump appeared to suggest in his comments on Wednesday that the Commerce report wouldn’t be a major factor in his decision-making process.

“The new report is not that kind of report. It’s just really a study that’s underway. We’ve studied it very carefully. We’ve seen the results. But the bottom line result is whether or not we can make a deal with the EU that is fair,” he said.

The President previously used the same authority to impose tariffs on foreign steel and aluminum. But the steel industry, and at least some American aluminum producers, welcomed the protection. The tariffs, which went into effect last March, have boosted demand for American steel, while also squeezing some manufacturers who are paying higher prices for metal components they need to produce other goods.

Trump has threatened tariffs on not just foreign-made vehicles, but auto parts made abroad, too. That’s why American automakers, who use imported parts in almost every model, say the cost of production would go up.

“There is nothing good that comes out of this, even for the domestic industry. There are going to be spillover effects all over the supply chain,” said Charlie Chesbrough, senior economist at Cox Automotive, which runs Kelley Blue Book and Autotrader.

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In a worst-case scenario, the tariffs could raise the price of an American-made vehicle by an average of $2,750, according to a report released this month by the Center for Automotive Research. The study says that the bigger price tag could lead to a dip in sales and job losses.

Foreign companies that have plants in the United States, including major players like BMW, Mercedes and Volkswagen, are also against the proposed tariffs. Some of the cars they make in the United States are shipped back to Europe, and sales of those models could dampen if the price goes up. BMW,which has its largest plant worldwide in South Carolina has called for removing US and EU auto duties entirely.

There is also a fear that countries could put retaliatory tariffs in place on cars assembled in the United States that are shipped overseas. A BofA Merrill Lynch Global Research report warned Wednesday that “full-blown tit-for-tat auto tariffs could trigger a global recession.”

The uncertainty itself is a problem for automakers, and could stifle foreign investment in the American industry, said John Bozzella, president and CEO of Global Automakers, a trade association that represents international automakers operating in the United States.

Steel and aluminum tariffs have already raised the price of manufacturing, and it’s unclear how long they will remain in place. The renegotiated North American Free Trade Agreement,which is awaiting ratification by Congress, would also bring big changes to the auto industry by creating stricter rules of origin in order to remain duty free. But it remains uncertain if the new trade deal has enough votes to pass, given opposition from some Republicans as well as Democrats.

Global auto brands like General Motors have come to depend on blockbuster sales to millions of Chinese consumers.

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Automakers are eager for clues as to whether Trump will impose the new tariffs. Some analysts believe the President will use them as a threat to gain some ground with trading partners as he attempts to strike new bilateral agreements with the European Union and Japan.

A bipartisan group of lawmakers recently claimed that Trump has abused his power to impose tariffs in the interest of national security, and introduced legislation that would rein in his authority to do so.

Last week, Republican Sen. Chuck Grassley, chairman of the Senate Finance Committee, called on Trump to forgo the tariffs.

“In short, raising tariffs on cars and parts would be a huge tax on consumers who buy or service their cars, whether they are imported or domestically produced,” Grassley said in a statement.

But there’s no question the American auto industry has already made up its mind about the potential for tariffs, said Blunt.

“The tariffs would have such a negative impact on the market, I don’t think there would be any winners,” he said.

CNN’s Maegan Vazquez contributed to this report.