As NAFTA Weighs, Trump’s Tariffs Drive New U.S. Auto Concerns

As NAFTA Weighs, Trump’s Tariffs Drive New U.S. Auto Concerns

car factory

Last month in March, Ann Wilson, a senior executive at the U.S. Motor and Equipment Manufacturers Association (MEMA) was tasked with fielding calls from American auto parts makers worried that President Donald Trump’s metal tariffs could potentially out them out of business.

NAFTA: A Little Backstory

Initially, Wilson’s job was to lobby NAFTA trade negotiators on behalf of the U.S. auto industry. However soon after the news came out that Trump was going to impose tariffs of 25 percent on steel imports and 10 percent on aluminum products. That’s what, according to NPR, led Wilson to be on her phone mostly accepting ringing with calls.

She told reporters at Reuters that many people are just concerned. They see it in the stock market and there’s been many CEOs that reached out too. As it stands, the U.S. auto parts industry employs about 880,000 workers. MEMA is who represents motor vehicle parts manufacturers. That’s actually the largest U.S. manufacturing sector and largest employer of manufacturing jobs in the United States.

Why is MEMA Concerned?

The reason why many of MEMA’s members are concerned is they could in fact become deeply affected by Trump’s tariffs. They use specialty steel and aluminum products imported from Europe, Asia and other regions.

Economists, on the other hand, are concerned mainly because they feel that instead of increasing employment, the price will increase for consumers of steel and aluminum. That mean the auto and oil industries will need to make cuts, potentially. The danger is in losing more jobs than are created. According to Wilson, MEMA has made good with the recent tax reform. The issue is that could be all for naught if they end up dealing with those proposed new tariffs.

Most of the parts companies, who might actually be the largest employers in a given local district are particularly concerned that should Trump move forward with the tariffs, the worst case scenario is that they might not be able to move ahead and will in fact be forced out of business since imports would cost more.

car parts

How This Affects Smaller Businesses and the Auto Industry

Outside of the larger companies, smaller suppliers are at risk too. They are less able to pivot from this and not be able to move as a business. Put simply, they are even less able to absorb the new costs than larger businesses. The reason the auto industry is the one that stands to lose the most is because the products that are imported include even specialized products like the steel tire cords used to reinforce tires, or cylinders used for auto fuel injectors. That’s on top of bigger more important products.

What Can MEMA Do?

Meanwhile the Washington-based MEMA is still actively lobbying the Trump administration and Congress. They want to highlight the notable hazards that come with imposing tariffs. They are also pushing back against the administration’s arguments that imports of the metals were inherently a security risk.

spare car parts

Back in mid-February, MEMA wrote to Trump. They wrote in argument against any action claiming that it is necessary for auto supply companies to be able to access any and all specialty steel and aluminum. That way they’d be able to keep manufacturing parts in the United States.

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