UAW President Calls For Tougher Import Tariffs, Insists Carmakers Can Afford It

US President Donald Trump’s new 25% tariff on imported cars that came in effect on April 2, and on car parts that will be enforced on May 3, has drawn a lot of criticism even in the States. While Detroit’s Big Three believe that this measure will do more harm than good in their business, Trump has found an ally in the face of the United Auto Workers’ president.

Trump Is Right, Free Trade Is Bad, Detroit’s Big Three Are Lying

UAW President Shawn Fain claims that the tariff is fully justified as, like Trump promises, it will increase U.S. production and investment, as well as government revenues, and create well-paying jobs in the local automotive sector. In fact, he goes further than that and believes that even harsher measures must be implemented because free trade has resulted in domestic manufacturers sending jobs to countries like Mexico and Canada, to the detriment of American workers.

“Free trade has been the most harmful government policy of my entire work life – and most all of our entire work lives,” Fain told UAW members in a livestreamed address on April 10. “We have to end this free trade disaster.”

More: UAW Leader Gets $275K Payday While Union Dips Further Into Red

Furthermore, he stated that, despite their protests, the Detroit Three will have no problem despite the price increases they insist the 25% tariff will force them to implement: “In 2023, we said record profits mean record contracts,” said Fain, as reported by the Detroit News.

“Company executives said our demands to raise wages and end tiers would force them to raise prices. They said the industry would never survive. Turns out, the companies (were) lying,” he said. “They could afford to do the right thing then, and they could afford to do the right thing now.”

Analysts Paint A Different, Much Grimmer Picture

These comments are in stark contrast to an analysis by the Center for Automotive Research (CAR) that was commissioned by Detroit Three advocacy group American Automotive Policy Council. In it, CAR writes that Trump’s 25% tariff will result in increased prices for new cars, reduced sales, and the closing of suppliers.

It also estimates a total of $107.9 billion in costs from tariffs for domestic automakers, and 6.8 million vehicles to be affected annually at General Motors Co., Ford Motor Co., and Stellantis NV, which make up for the vast majority of US-built vehicles.

“Businesses are hardy and willing to take risks,” said K. Venkatesh Prasad, CAR’s senior vice president of research and chief innovation officer. “But they’re generally adverse to uncertainty. They’re asking how do I distribute this? Let’s divide this up, and let’s do the lifting here.” Which means that, unless automakers decide to take a hit themselves (which is highly unlikely), the increased costs will also affect suppliers, dealerships and, of course, customers.

According to him, a drop in new car sales is all but guaranteed: “A lot of buyers have price sensitivity. They might decide (it’s) maybe not a good time to buy or will buy a used car instead. That then creates a demand for used car prices.” In other words, no matter how you slice it, anyone who wants to buy a new car will have to pay more, whether they go for a new or a used one.

That finding is supported by the Anderson Economic Group consulting firm, which projects the cost of a new vehicle to increase by $2,500-$10,000 for most vehicles, $10,000-$12,000 for large luxury vehicles, and as much as $20,000 for imported ultra-luxury models. This, in turn, will send some buyers to the used car market, increasing demand for available inventory and increasing their prices as well.

More: Feds Sue GM And UAW For Age Discrimination, FCA Over Sexual Harassment

Fain’s claims that American workers stand to profit from the tariffs aren’t true, at least according to AEG. That’s because it estimates GM, Ford and Stellantis to have their operating profits in North America reduced by about $5 billion this year if the tariffs remain in place. This would result in workers’ annual profit-sharing checks, that are usually paid between February and March, to be cut by $1,000-$5,000.

GM’s Response To Tariffs Hailed By Fain As Proof Of His Claims

On their part, US automakers responded differently to Trump’s tariffs. Stellantis, for instance, announced it would idle its Windsor and Toluca plants, where the Chrysler Pacifica, Dodge Charger Daytona, Jeep Wagoneer S and Jeep Compass are built, for two weeks and the rest of April, respectively. General Motors, on the other hand, will increase Chevrolet Silverado and GMC Sierra production at its Fort Wayne, Indiana plant and is hiring hundreds of temporary workers.

GM‘s decision certainly didn’t go unnoticed by Fain: “These plants still have that capacity right now,” he said. “That’s tens of thousands of jobs that we could bring back right now. Our research tells us that if the Big Three alone just got their currently active plants up to 100% capacity, they could add 50,000 jobs.”

Still, Michigan Governor Gretchen Whitmer, who was supported by the UAW in the elections, voiced her concerns about the tariffs impacting the local industry: “There are suppliers that are still trying to recover from inflation and COVID who are on the bubble and don’t have the resources to weather this up-and-down, uncertain time where the rules keep changing,” she noted. “And so I do worry that a lot of businesses won’t make it if this goes on much longer. I worry that big companies that are relying on those small businesses will pay a price as well.”

“We’ll lose some UAW jobs,” Whitmer conceded. “And I understand the leader wants to try to be a part of the conversation. And he’s a good guy. He’s done some good things. But I think that the longer-term concern is the loss of UAW jobs, and the pain that’s going to be inflicted in the short term.”

So, both those in favor and against Trump‘s tariffs seem to make some good arguments, though we won’t know for sure which side is right for quite some time as the measure went into effect only last week. But what do you think, are the local industry and workers going to profit from the 25% tariff or will they take a serious hit instead? Let us known in the comments – just please, keep the political debates to a minimum. Let’s focus on the real issue: the future of our cars.