Trump's border tax faces more opposition--this time, from auto dealers

January 30, 2017

During his first week in office, Donald Trump made headlines over two border-boosting policies. Yesterday, the American International Automobile Dealers Association announced plans to fight one of the president's proposals tooth and nail. 

On Friday, Trump signed an executive order suspending refugee resettlements in the U.S. and blocking visitors from seven majority-Muslim countries for 120 days. It also halted resettlement programs for Syrian refugees indefinitely. The order has prompted backlashes and protests nationwide, with several in the auto industry--notably Tesla's Elon Musk and Uber's Travis Kalanick--attacked over their weak opposition to the policy.

ALSO SEE: Trump's tariffs: good or bad for the auto industry?

But that's not what AIADA plans to fight. It's more focused on Trump's plan to build his long-promised wall along the U.S.-Mexico border and to implement border taxes to pay for the wall's construction. As we discussed Friday, such a policy would provide a few wins for auto industry workers, but pose serious challenges for others in the sector.  

Some of those "others" include auto dealers, particularly those who sell foreign brands. Incoming AIADA president Paul Ritchie says that, if implemented, the border taxes could put 125,000 U.S. jobs at risk by making imported autos--even those built for Detroit companies--more expensive for consumers. Many of the jobs Ritchie cites are housed at the 36 U.S. facilities owned by foreign automakers.

Our take

Trump's White House bid upended some longtime political affiliations. For example, much of Trump's support in Rust Belt states came from union workers, who've typically leaned Democrat, but were wooed by Trump's promises to improve America's manufacturing sector. Not surprisingly, many of those same union workers are excited by his plans to implement a border tax, renegotiate trade deals like NAFTA, and encourage domestic production of automobiles. 

Like some other business groups, AIADA has often leaned right due to the GOP's more business-friendly policies and its opposition to industry regulation. So, it's a little unusual to see a major business organization virulently opposed to a Republican plan, even with the plan's attendant promises of cuts to the corporate tax rate. 

One thing's for sure: this is a very new, very challenging landscape for everyone to navigate, including AIADA, unions, Republicans, and Democrats. As the debate unfolds, it may not be pretty to watch, but it's bound to be interesting.

Note: A previous version of this story mistakenly identified Ritchie as the incoming president of the National Automobile Dealers Association.

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