Here's Why US Automakers Fear The Pacific Trade Pact - Ford Motor (NYSE:F), General Motors (NYSE:GM)

As President Obama works to secure a trade deal between the US and Asia, he has been bogged down by critics from several sectors who worry that removing some of the restrictions limiting foreign trade will have detrimental effects on US companies. One of the loudest cries has come from the auto industry, where the pact could have the largest impact.

Shift Toward Foreign Cars

According to a

study

published by the Peterson Institute for International Economics, Obama's Pacific Trade Pact could increase US imports by $30.8 billion over the next ten years, but exports are only forecast to rise $7.8 billion during that time period. For the auto industry, where domestic sales are paramount, this figure is startling and many worry that the deal will encourage US customers to consider Asian-made cars.

Currency Concerns

Another major concern for automakers like

Ford Motor Co. F and General Motors GM has been the impact of currency fluctuations. With the dollar on the rise, US companies have seen their margins decline as car sales in other currencies become less valuable. They are pushing for Obama to include rules regarding currency manipulation, saying that the Japanese government could dramatically reduce the value of the yen, allowing companies like Toyota Motor Corp TM to undercut US manufacturers. Reduction In US Operations Car makers also claim that US operations for Asian automakers could also be affected by the trade deal, resulting in a loss of thousands of US jobs. The new deal may eliminate the 2.5 percent tariff on foreign cars and auto parts, giving Asian firms reason to return their operations to their home country. Many Asian car makers have opened US plants in order to avoid the extra fees, but once they are eliminated many worry that without that incentive they won't be interested in investing in US operations.

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