Mike Jackson, AutoNation CEO: A Trade War will be “Inflationary”


AutoNation’s CEO and Chairman, Mike Jackson, is the latest executive to speak out against President Donald Trump’s proposed tariffs on cars and SUVs being imported from Europe. In an interview with CNBC on June 27, 2018, Jackson stated that the tariffs have the potential to start a “a real trade war” that would “dramatically” raise prices for customers. This comes after Trump recently used his favorite platform, Twitter, to threaten even more tariffs on the European Union (EU) if it does not drop tariffs on numerous U.S.-made products.

Jackson slammed Trump’s recent South Carolina speech, calling it another “fact-free riff that just makes your head hurt.” One of his main points was that the EU, specifically Germany, is already investing in American cars (i.e. BMW, Volkswagen, and Mercedes) and the union should not be punished for it since that is obviously useful for the U.S. economy. He added that Germany had offered to go “tariff free” last week, which the Trump administration appears to not have even considered. Perhaps one of Jackson’s strongest points was made when he said, “automotive tariffs will make steel tariffs look like a company picnic” and that “the numbers are so much bigger.” Though Jackson disagrees with Trump on the current threats against the EU, it is important to note that he started his interview by congratulating the administration for “taking on China” due to the lack of “free trade” and “fair trade” that he believes in.

The Alliance of Automobile Manufacturers released projections indicating that the proposed tariffs would increase the average price of a new vehicle by $5,800 and end up imposing $45 billion in taxes on the auto industry. A spokeswoman for the alliance, Gloria Bergquist, mentioned that the tax increases would “largely cancel out the benefits of the tax cuts,” which have been one of Trump’s proudest moves so far in his presidency. The alliance also warned that the tariffs “will significantly impact many communities and families across the country” due to increased production costs, increased vehicle prices, and fewer sales, which would lead to a negative impact on the job force.

Contradicting the concerns, other prominent people in the auto industry have played down the tariff threats and aren’t worried. In a CNBC interview with Bob Lutz, a former General Motors vice chairman, he stated that the tariff threats are just a “negotiating posture.” He added that Trump’s aspiration to add more jobs in the U.S. will not be made possible “if other people have four times the duty on American cars than we have on theirs.” He referred to the threats as “typical Trump,” perhaps because Trump has been a businessman for several decades and has used negotiating tactics throughout his entire life. Many pro-tariff individuals feel that Trump will eventually be able to negotiate with the EU and come up with a plan that won’t have a destructive impact on the U.S.

Nevertheless, Jackson pointed out that the U.S.’s automotive industry is “healthy” and the tariffs would be damaging. So far, Trump’s tariffs have not been well-received by other countries and corporations either. For example, several countries (e.g. France and Canada) have threatened to take action should Trump’s tariffs be implemented, and motorcycle giant Harley Davidson has already reported it will move production out of the United States. This goes against Trump’s plan for the tariffs, as they were supposed to keep corporations (and therefore jobs) here in the U.S.

Of course, we are still waiting on the outcome of the investigation into whether or not foreign automobiles pose a threat to the United States. Justin Westbrook of Jalopnik reported that Toyota, which would be impacted by the decision, released a statement on June 27 denouncing the investigation and stating that 130,000 American workers are “not a national security threat.” Many other people and corporations agree, including several CEOs of other corporations who have spoken out and indicated that it would be “illogical” for imported vehicles to be treated as a threat. Overall, the entire situation could end up as a huge blow to automakers and consumers, so if you need a new car, you might want to go get it now.

Image credit: Fortune