Trump’s car tariffs for Europe could cost 100,000 US jobs

06 July 2018

According to a report from economic analysis and research consultancy Oxford Economics, President Trump’s threatened 20% tariff on imported EU cars could cost 100,000 US jobs. The firm also projects that it would knock 0.1% off of the US GDP in 2019.

President Donald Trump’s campaign of protectionism ramped up in velocity when the US president threatened to place a 20% tariff on European automobiles last month. The threat of tariffs on EU car imports, which would mostly affect Germany, arrives after Trump imposed steel and aluminum tariffs earlier in the year. The EU responded in kind by putting tariffs on $3.25 billion worth of US-made products like jeans and bourbon. The latest escalation in Trump’s protectionist policy threatens to unleash another round of retaliatory action from the EU, likely leaving both regions in worse economic shape. The EU has promised to hit up to $300 billion in US goods with countermeasures if Trump goes through with the auto tariffs.

The negative economic effects of the car tariffs would be felt in the US even before the imposition of retaliatory EU measures. Indeed, economic analysis and research consultancy Oxford Economics estimates that a 20% tariff on European cars could knock 0.1% off US GDP in 2019, while causing the loss of 100,000 American jobs. If the tariffs are still in place in 2020, the cumulative job losses could reach almost 150,000.Trump’s EU car tariffs could cost 100,000 US jobsAccording to the report, higher prices on imported cars would decrease spending and investment by consumers and producers, affecting the auto sector and costing jobs. Higher parts prices would also negatively affect EU manufacturers with US factories.

EU officials are warning that the tariffs would damage the supply chains and economic health of auto firms on both sides of the Atlantic. EU carmakers in the US produce 2.9 million cars annually (over a quarter of US production), supporting over 540,000 American jobs.

The Oxford report cautioned that the estimated effects of the tariffs could be double the trouble. “Given the large supply chain multipliers in the automotive sector, and the knock-on effects from increased business uncertainty, the total shock to the economy could be twice as large.”  As such, the indirect  ripple effects throughout the auto sector’s extensive supply chain could double the estimated economic damage, while added business uncertainty could slow investment and household spending.

If enacted, the US tariffs would hit about €46 billion worth of imported EU vehicles, representing a sevenfold increase over the previously levied metal tariffs.

Trump’s stated rationale for the threatened tariff increase is an imbalance of current tariff rates, wherein US car exports are hit with 10% duties going into the EU, while EU cars imported into the US are only hit with a 2.5% tariff. Another vaguer reason is ‘national security, which an EU commission paper says is baseless, adding that the reasoning “harms trade, growth, and jobs in the US and abroad, weakens the bonds with friends and allies, and shifts the attention away from the shared strategic challenges that genuinely threaten the market-based western economic model.”

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Consultants can increase productivity with automated vehicle programs

16 January 2019

More and more people – including consultants – are driving their own cars for work. According to the U.S. Department of Transportation, the personal vehicle comprises 81% of all business travel. Whether it’s to meet with clients, attend industry conferences or participate in other field-related duties, no work-related travel method comes close. Tim LeBrun, Senior Regional Sales Executive at Motus, explains how consultants could increase their productivity with automated vehicle programs. 

Advisors and independents consultants often spend large portions of their time on the road. They commonly meet with clients onsite or review progress with them until a project is complete. If a client is local, this can mean several trips between the consultant’s home and the client’s office each week. Large amounts of paperwork – including mileage logs and recaps detailing how the consultant spent his or her day – accompany these trips. These logs ensure consultants are compensated fairly for any business-related expense incurred as a result of their work.

Unfortunately, many consulting firms still use manual, tedious and time consuming processes that eat up productivity. Consider this: if each employee spends just 12 minutes a day manually tracking their mileage, that equates to a full hour of work in one week or 52 hours a year. That’s more than a full week’s worth of work spent on basic data entry alone. 

While trite, the time-old adage “time is money” rings true for many consultants. The less time they spend tracking mileage by hand, the more they can spend completing billable work on behalf of their clients. As such, consulting firms need to think strategically about the processes they use to reimburse employees for any driving expenses incurred while on the job.

Consultants can increase productivity with automated vehicle programs 

From Excel Spreadsheets to Vehicle Programs

In today’s increasingly mobile world, many consultants choose to use their personal cars for business. When reimbursing for the business use of personally-owned vehicles, firms can implement vehicle programs that track, process and compensate their employees without all the tedious work that manual reporting entails. There are three major vehicle program options that provide vehicle reimbursement for companies whose employees choose to drive their own car for work. These include:

Cents-per-Mile (CPM) Programs

These programs reimburse workers at a cents-per-mile rate for business travel in their personal vehicles. This program works best for firms whose consultants drive 5,000 miles or less each year. Workers tend to be over reimbursed if their mileage is significantly higher. 

Flat Car Allowances

These programs reimburse all consultants and staff the same dollar amount. How many miles they actually drive has no impact. Everyone receives the same – for example, $500 per month. While these programs are simple to implement and require no mileage tracking whatsoever, they are not the most accurate – or fair – option available. Employees can drive a varying number of miles based on how far their clients are, how often they need to visit clients and the length of their project. For example, one advisor may drive 500 miles per month while another drives 900 per month. Paying both employees the same amount means that the low-mileage worker may be overpaid and the high-mileage worker is underpaid. Neither is good for employee morale or a firm’s bottom line. 

Additionally, flat car allowances are subject to both Federal Insurance Contributions Act (FICA) taxes and income taxes. This means that providing a flat car allowance of $500 costs an organization $538 after taxes, while employees end up taking home roughly $330, depending on their tax bracket.

Fixed and Variable Rate (FAVR) Programs

These programs provide a customized reimbursement to each worker based on their monthly business mileage and individualized fixed and variable costs. While mileage is perhaps the biggest expense, workers incur a whole host of additional expenses as they drive. These include fuel, maintenance costs, insurance premiums and depreciation. All must be accounted and reimbursed for. By reimbursing each employee based on the true cost of operating their vehicle, FAVR is the most accurate and fair of the vehicle program options. 

In addition, FAVR reimbursements can be paid tax-free – meaning firms spend less in taxes, while employees can take home the full amount of their reimbursement. 

Location-based technologies

To maximize vehicle program efficiency, firms should also consider implementing location-based technologies in conjunction with their program. These technologies automate mileage tracking in the field so that trip-by-trip mileage can be calculated more accurately. They also digitize travel data, including route optimization, trip and stop durations, and territory efficiency. This allows their employees to optimize driving patterns, improve procedures and ultimately maximize their productivity. When paired with a FAVR program, automated technologies are able to calculate reimbursement rates for each employee based on data that tracks exactly where that employee drives and how much they drive. 

The math is simple: the less time consultants waste, the more they can get done and the higher the margin of a consulting firm. For consultants looking to reduce the number of hours they spend on administrative work to increase their billable hours, leveraging automated technologies with the proper vehicle program can set them on the right path.