ABPA: Tariffs will Result in Higher OEM Service Part Prices
June 21, 2018—The Automotive Body Parts Association (ABPA) released a statement opposing all tariffs targeting the automotive industry, specifically imported auto parts.
According to the statement, tariffs targeting the auto industry "severely" diminish free enterprise and competition establishing undesirable domestic monopolies.
Key Points from the Statement
If proposed tariffs on aftermarket parts were implemented, then 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.
The proposed tariffs will result in higher prices for OEM service parts.
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 marketplace.
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.
A unique feature to the aftermarket body parts industry versus the entire aftermarket parts industry is that 90 percent 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 tenth largest trade partner for the U.S. and represents a very strategic military and economic partner in a region dominated by Chinese influences.