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April 16, 2019 10:00 AM, EDT

Trade Groups Push for No Tariffs on Vehicle Parts

Vehicle Parts Trump at a meeting in the White House. (Al Drago/Bloomberg News)

Officials in the transportation industry warned that if President Donald Trump follows through on the threat of tariffs on imported truck and automobile parts, the effects could be devastating for jobs in the United States.

At Trump’s request, the Department of Commerce in May 2018 began a Section 232 National Security Investigation of automobile and truck parts. The purpose was to determine the effects of imported parts on national security and “whether such imports are weakening our internal economy and may impair the national security.”

The agency delivered its recommendations to Trump in mid-February, and some transportation industry members believe those recommendations likely include tariffs on fully assembled vehicles or on parts — especially those related to electric, automated, connected or shared vehicles.

The final report has not been made public, and the White House has until mid-May to decide if it agrees with the findings and whether it will act upon the recommendations.

With the clock ticking on this decision, the vehicle parts industry is ramping up its efforts to fight the possible tariffs.

The Motor & Equipment Manufacturers Association, a trade association that represents parts suppliers, said in a report released April 9 that tariffs as high as 25% on parts could jeopardize as many as 871,000 vehicle supplier jobs in the United States and damage the country’s global competitive position.

Vehicle Parts

Wilson

“If [there are] some level of tariffs, or quotas — which I think is ultimately what we are looking at — what does this mean for jobs?” asked Ann Wilson, MEMA senior vice president of government affairs. “As the largest employer for manufacturing jobs in the U.S., we think that jobs are really important.”

“Tariffs could come tomorrow, or they may never come. I think this is the general approach and we have seen it happen with the Trump administration,” said economist Chad Brown of the Peterson Institute for International Economics at an April 11 meeting with reporters. “This administration is very different from others in terms of what it thinks it knows about how industries operate and what is best for the American economy.”

Since the report has not been made public, it is unclear how, specifically, it might impact the trucking industry. And that secrecy is leading to frustration. “We don’t know what is in the report, however we are working under the assumption truck parts are in the report,” Cindy Sebrell, MEMA vice president of communications, told Transport Topics. “No one knows definitely what is in this report and what action the president may take.”

Vehicle Parts

“The report is not public yet and we have no comment on what is in the report,” a Commerce Department spokesman told TT.

Other organizations are joining MEMA in opposing the possible tariffs and warning of the potential consequences.

A group of organizations that includes the Heavy Duty Manufacturers Association and the Association of Equipment Manufacturers said in an April 4 letter to Trump that the investigation “poses a serious economic threat to the nation’s entire economy and the wellbeing of our manufacturers, dealers, employees and customers. Any remedy proposing quotas or tariffs should not be implemented. We urge that you not impose tariffs on any imported vehicle or motor vehicle parts.”

Trade Groups April 4 Letter by Transport Topics on Scribd

This is not the first time the Trump administration has used Section 232 of the Trade Expansion Act to impose or threaten to impose tariffs on specific products. In 2018, the White House set tariffs on aluminum and steel that were blamed for price increases and domestic shortages, and which led to retaliatory tariffs by Canada and the European Union.