US tariffs may hurt car parts industry
Manufacturers are concerned
FROM A HOTEL in Mexico City, Ann Wilson, a senior executive at the US Motor and Equipment Manufacturers’ Association (Mema), is fielding calls from American car parts makers worried that President Donald Trump’s metal tariffs will force them out of business.
Wilson came to Mexico with a different task – to lobby North American Free Trade Agreement (Nafta) trade negotiators on behalf of the US car industry, but once Trump announced on Thursday that he would impose tariffs of 25 percent on steel imports and 10 percent on aluminium products, her phone began ringing with calls from members at home.
“Everybody is very concerned,” Wilson said on Friday. “We’ve seen it in the stock market and level of chief executives’ calls I’ve been getting… and how much of this overrides everything else.”
The US car parts industry employs about 880 000 workers and Mema represents motor vehicle parts manufacturers, the largest US manufacturing sector and largest employer of manufacturing jobs in the US.
Some of Mema’s members would be deeply affected by Trump’s tariffs, because they rely on specialty steel and aluminium products imported from Europe, Asia and other regions, said Wilson, speaking on the sidelines of the Nafta talks. Many economists say that instead of increasing employment, price increases for consumers of steel and aluminium such as the car and oil industries will destroy more US jobs than they create.
“Our industry was really pleased with what we accomplished with tax reform and the improvement in the economy, and a lot of that enthusiasm could all be for naught if we do something like this,” said Wilson.
The parts companies, some of them the largest employers in a local district, worry that if Trump goes ahead with the tariffs they may not be able to adjust quickly enough and be forced out of business by the substantially higher cost of imports. Foreign suppliers may also begin to look outside the US for other customers.
“The smaller suppliers may not be able to absorb this kind of cost. It’s not as simple as saying we’ll just make that specialty steel here,” said Wilson. Some of the products that are imported are as specialised as steel tyre cords used to reinforce tyres, or cylinders used for car fuel injectors. In mid-February, Mema wrote to Trump opposing any action saying it was necessary for car supply companies to have access to specialty steel and aluminium products so they can keep manufacturing parts in the US.