The ABPA would like to first express our respect for the administration’s intentions to protect US industries, their employees and our homeland security in an ever-expanding world economy. However, we oppose all tariffs targeting the automotive industry and specifically imported auto parts because ultimately, they severely diminish free enterprise and competition establishing undesirable domestic monopolies that would compound the impact of the tariffs on Americans.
Below are specific details on how the tariffs would affect American consumers, the US economy and our national security interests.
Aftermarket Replacement Parts – The automotive replacement parts market, including the aftermarket crash parts industry the ABPA represents, would be greatly diminished with any tariffs as this market services the US consumer with affordable alternative parts to maintain or enhance their vehicle. If these proposed tariffs are implemented, then the added costs would be passed on to the consumer. A study completed by Microeconomic Consulting & Research shows a $1.5 billion dollar per year benefit to consumers because of the competition in the auto body parts industry.
Price increases to OEM Service Parts – One of the biggest confusions in the automotive industry is that the components for the OEM service parts being supplied to the US car companies (i.e. the “Big Three”) are locally produced when they are in fact sourced from all over the world. They then combine them with other components claiming they are “US produced” but actually they are just “US assembled”. The proposed tariffs will result in higher prices for the OEM service parts – not just their aftermarket equivalents.
Insurance Costs – With higher replacement parts costs comes higher insurance costs. The insurance industry relies on imported aftermarket replacement parts to keep premium costs down for Americans. In addition, the presence of an alternative option in the parts market keeps the car companies’ prices in check as there is competition in the market place.
Negation of recent US Tax Reform – Due to the increase in out of pocket costs to American consumers for vehicle repair, the additional burden placed on consumers would negate any tax savings as provided by the recent tax reform here in the US. Repairing a vehicle is already too expense for many Americans.
Additionally, many automotive body parts distributors may be forced to close or lay off workers as they cannot absorb these additional costs. The ABPA alone represents 150 member companies with approximately 65,000 jobs that could potentially be lost.
National Security Concerns
A unique feature to the aftermarket body parts industry versus the entire aftermarket parts industry is that 90% of the aftermarket body parts are produced in Taiwan. Since 1979 the U.S. has not recognized Taiwan as a separate country from China in trade agreements. However, for national security interest, in 1979 the Taiwan Relations Act was created to conduct unofficial relations with Taiwan. Today Taiwan is the 10th largest trade partner for the U.S. and represents a very strategic military and economic partner in a region dominated by Chinese influences.
Ultimately, we believe these proposed tariffs would not improve the automotive industry, would cause the loss of thousands of American jobs, not improve US homeland security and will hurt American consumers. We would ask that the administration not move forward with these tariffs and work with our international trading partners in other ways to protect our economy and country.
About the ABPA
With more than 160 members, the Automotive Body Parts Association (ABPA) occupies over 400 distinctive locations including collision parts distribution centers, manufacturing facilities, and parts recycling plants. ABPA’s members are responsible for distributing more than 80 percent of the independently produced aftermarket crash replacement parts sold to the collision repair trade. For more information about the ABPA, visit www.autobpa.com.