Automotive News Canada - August 2019 - v2 - F14

FIXED OPS JOURNAL ILLUSTRATION

TARIFF TENSIONS

As trade war grows, Trump's levies on China-made
repair parts aren't pinching service shops ---- yet

ALYSHA WEBB
foj@autonews.com

The supplier association defines automaker-branded and independent replacement parts
as aftermarket parts, McCarthy notes. Most parts
imported from China are aftermarket-related, he
says. A breakdown of what share of these parts is
automaker-branded was unavailable.

ealership service departments aren't
feeling much pain - yet - from the
higher tariffs imposed by President
Donald Trump on replacement
auto parts imported from China.
But as the U.S.-China trade war gets hotter, re25 percent tax
tailers and industry experts predict that franTwo sets of tariffs affect the U.S. auto sector,
chised dealerships will be forced to pass
but so-called Section 301 tariffs - a
tariff-related price increases for repair
reference to part of a U.S. trade law -
parts on to their service customers or
that are specific to China have the
accept lower fixed ops profit margins.
larger impact on dealership service
"It's like a slow boil," Paul McCarthy,
departments' costs.
president of the Automotive AftermarCurrently, $250 billion worth of imket Suppliers Association, a division of
ports from China, including many
the Motor & Equipment Manufacturers
auto parts, face a 25 percent tariff.
Association, told Fixed Ops Journal.
This category includes brake pads,
Higher parts prices charged to con- McCarthy: "Like
windshield wipers, mirrors and other
sumers are "not something we will a slow boil"
frequently replaced parts as well as
wake up tomorrow and see," he says.
all engine parts, McCarthy says.
"But over the long term, consumers will begin
This month, the Trump administration imto feel the pain."
posed a 10 percent tariff, to take effect Sept. 1, on
According to the U.S. Commerce Departanother $300 billion in imports, including matement, the U.S. imported $20.15 billion in auto
rials and components used to make auto parts.
parts from China in 2018, second only to MexThe imposition of the 25 percent rate on a
ico - another threatened target of U.S. tariffs
wide array of parts took effect in May. Price in- with $56.34 billion. Total U.S. auto parts
creases for these parts are "just starting to
imports last year were $158.67 billion.
trickle through," McCarthy says.

PAGE 14

AUGUST 2019

Imports targeted

The U.S. has placed, or is threatening,
several types of tariffs on Chinese
imports, including auto parts.
Section 301 tariffs are specific to China.
They include a 25% tariff on $50 billion
worth of imports, imposed in 2 phases
in July and August 2018. In addition, a
10% tariff on $200 billion in imports,
including hundreds of auto parts and
materials and components used to
make parts, was imposed in September
2018 and increased to 25% in May.
Section 232 tariffs include a 25% tariff
on steel imports and a 10% tariff on
aluminum imports from most countries,
including China, which were imposed in
June 2018.
This month, the Trump administration
imposed a 10% tariff on an additional
$300 billion in Chinese imports, which
will affect more materials and components used to make auto parts. This
tariff is scheduled to take effect Sept. 1.
Although the administration later
delayed imposing that tariff until Dec.
15 on a broad range of consumer
goods, the delay generally does not
apply to auto parts.

The initial tariff on the parts was 10 percent,
and that increase was muted by a weakening
see TARIFFS, Page 16

Automotive News Canada - August 2019 - v2

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