Talks between the United States, Japan, and the European Union regarding the tariffs in place on exports from the US could take a foul turn.

Recent news has surfaced that the Commerce Department is working to keep the details of the reports of tariffs that will be imposed on vehicles and automotive parts that are imported into the US a secret. The secrecy doesn’t allow domestic automakers to respond to the details of the report and help to guide the decision in a direction thatwon’t cause economicproblems in the future.

The Damaging Effects of Potential Tariffs

If the proposed tariffs are imposed on vehicles and parts that are imported, the cost will be extreme. To start with, a tariff could cause the price of vehicles to increase by as much as 25 percent, which is much more than anyone is going to be able or willing to pay just to have a car. The fact that prices will increase by this amount will turn many away from buying newcars which will slow the need for production and cause many automakers in the US to lose their jobs.

While the idea of keeping jobs in the US and pushing automakers to build their vehicles here instead of overseas is a noble one, the fact is, the automotive industry is a global one. Even vehicles that are built in the US are completed with parts that come from overseas providers. A tariff on these parts would cause increases in the price of vehicles and result in the automotive industry being set back several decades with the tariffs that are imposed. The negative effects of tariffs on vehicles could cause an economic downturn we haven’t seen in a long time in the US.

Possible Positive Results of Lifted Tariffs

If the goal of the President and his administration is to have Japan and the EU lift the tariffs that are currently imposed on US exports, the positive results could be amazing. Prices in those countries of items that are built in the US would be lowered and cause a demand that would result in a positive effect onthe economy that we enjoy in our country. This would create a level playing field between countries and allow trade to be stronger to some of the largest partners we have in trade.

The Challenge for Automakers

Unfortunately, the US automakers aren’t confident that tariffs on exports will be lifted and import tariffs left off the table. The fear is that tariffs on imports will be imposed which will cause a detrimental effect on the industry in the US that wouldn’t have been thought of prior to the current Presidential term. While it’s admirable to want more jobs to stay in the US and to reward automakers for building vehicles in the US, the global nature of the automotive industry doesn’t allow for threats of tariffs to take place without a serious negative impact.