New tariffs could create messy uncertainty for U.S. auto parts manufacturers
This week, President Donald Trump announced he will move ahead with tariffs on aluminum and steel imports, including imports from the European Union, Mexico, and Canada. Effective today, steel imports will be taxed at 25 percent and aluminum at 10 percent.
So how will this affect the huge amount of automotive parts that go back and forth from plants in Ontario and Michigan?
Ann Wilson is the senior vice president of government affairs for the Motor & Equipment Manufacturers Association (MEMA). She spoke with Stateside about potential effects of Trump’s new tariffs.
Wilson said the first consequence of these new tariffs is that they will diminish American manufacturers' access to raw materials.
“There is very highly specified technical steel aluminum that comes into this country from Europe, Canada, Mexico and other sources, but then other manufacturing is done in the United States to those materials that create jobs in this country,” Wilson said.
President Trump said the country’s manufacturers should be using more U.S. steel. According to Wilson, the majority of new U.S. vehicles are made from domestic steel and aluminum, but there are still parts that need to be made with imported materials.
“What we're talking about is very specialized steel and aluminum that is required,” Wilson said.
It's not just steel tariffs that concern Wilson. She is also worried about the impact broader potential tariffs on automotive parts and Chinese products will have on the U.S. market.
“Some of these parts will have tariffs or taxes associated them more than one time, and that's going to increase the cost of the goods. So it's going to increase the cost of a car, increase the cost of a motor vehicle part,” Wilson said. “Its also going to diminish the opportunities our members have to invest in their employees and have other further investment in the United States.”
Wilson said she has had conversations with Trump’s administration, but added that this administration really believes these tariffs will have immediate positive effects on domestic steel and aluminum production — which Wilson says is not the case.
“It's not going to be easy — like turning on a dime — for us to be able to find new sources of steel and aluminum to be able to continue to make these parts in this country,” Wilson explained.
MEMA member organizations directly employ close to 900,000 people in the United States and nearly 126,000 in Michigan alone, according to Wilson. She said while we do not know the effect these tariffs will have on jobs, manufacturers will likely have to reevaluate how they put together their budgets.
“When our members, our manufacturers, have to invest more in raw materials, they have less of an opportunity to invest more in their employees, and invest more in future endeavors,” Wilson said. “In addition to that, as everyone knows, manufacturers need certainty. They need to know what the regulations are going to be, they need to know what the market conditions are going to be, and these kinds of changes in our trade policy don’t provide that kind of certainty.”
Wilson said she will continue to have conversations with the Trump administration and educate them on the impact the tariffs have on MEMA's members.