AIADA Year in Review with Howard Hakes

When I took over as AIADA’s Chairman less than 12 months ago, I knew I had my work cut out for me. AIADA was founded 50 years ago with one mission – to protect international nameplate dealers in the United States against protectionist, anti-trade policies. We have seen a lot over the past half century – from luxury taxes to truck tariffs – but when it comes to trade, I am not sure we have ever seen a year like 2019.

First, great strides were made in negotiating and preparing passage of the U.S.-Mexico-Canada Free Trade Agreement (USMCA). The NAFTA replacement was originally signed in 2018 and then, despite tariff threats and negotiation clashes, successfully amended by all three countries last month. Congressional Democrats have struck a deal with the White House and the agreement has successfully been passed through both the House and United State Senate. While details over rules pertaining to the automotive industry still need to be hammered out, we are gratified to see a deal has been reached, and that North American auto production can continue to grow and benefit all Americans.

First, great strides were made in negotiating and preparing passage of the U.S.-Mexico-Canada Free Trade Agreement (USMCA). The NAFTA replacement was originally signed in 2018 and then, despite tariff threats and negotiation clashes, successfully amended by all three countries last month. Congressional Democrats have struck a deal with the White House and the agreement has successfully been passed through both the House and United State Senate. While details over rules pertaining to the automotive industry still need to be hammered out, we are gratified to see a deal has been reached, and that North American auto production can continue to grow and benefit all Americans.

Much progress has also been made on our trade relationship with China. In January, President Trump signed phase one of an agreement that encompasses the reduction of tariffs, the valuation of currency and the protection of intellectual property rights. A number of issues remain unresolved, including China’s corporate subsidies, however, AIADA views the headway made, and dialogue opened between the world’s two largest economies, as positive steps. Phase two is expected to get underway later this year.

Efforts to reach a trade deal between the U.S. and the European Union were not as successful in 2019, but AIADA remains hopeful that negotiators will reach an agreement in 2020. New EU Trade Commissioner Phil Hogan met with U.S. government officials this month during a trip to Washington with the goal of “resetting the relationship” between the two trade blocs that had been disrupted by U.S. tariffs and European trade barriers to American agriculture. For auto dealers, a trade agreement would be a welcome opportunity to reduce tariffs on imports (the EU has a 10 percent tariff on American cars and trucks, the U.S. has a 25 percent tariff on European trucks) and benefit customers hunting for deals.

Additionally, the U.S. had some success with Japan in 2019, signing limited deals in December that went into effect January 1st. However, the U.S.-Japan Trade Agreement and the U.S.-Japan Digital Trade Agreement did not address autos, and President Trump has not explicitly ruled out placing tariffs on Japanese auto imports. Further negotiations are expected this year to address the $67 billion U.S. trade deficit with Japan.

Throughout all of these trade negotiations, there has been one common theme – Tariffs. President Trump views them as a useful tool to force our trading partners in line. While he has seen some success with this strategy, American businesses worry that the constant threat of tariffs is creating an environment of uncertainty that inhibits expansion and hiring. The auto industry, which depends so much on global trade, is particularly troubled by tariffs, and uniquely impacted by an inability to engage in long term production planning.

Dealers in 2019 were rightfully disturbed by the threat of 25 percent 232-Tariffs after the Department of Commerce identified autos and auto part imports as threats to our national security. This head-scratching report was never officially released to the public, and thanks in part to a vigorous defense raised by auto dealers at AIADA’s annual D.C. fly-in in the spring, it was put on hold, for now. In 2020 my successor, Honda dealer Jason Courter, will have his hands full continuing to push back against 232-Tariffs that could raise the price of cars by as much as $7,000 and threaten up to 700,000 American jobs.

Over the past year I have had an up close and personal view of how much AIADA’s engaged and active membership does on behalf of the entire U.S. dealer body. When dealers work together, the results speak for themselves. It’s been a year of economic growth and remarkable advances in global trade and I am more confident than ever in our industry’s bright future. Serving as AIADA’s Chairman during such an eventful year has been a once-in a lifetime experience, and one that I will always treasure. It seems appropriate that our association will mark its 50th year amidst so much progress, and I am optimistic about what the future holds for us!

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