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MEMA Addresses Potential Impacts of Recent U.S. – Mexico Tariffs at Council of the Americas Event on June 5

Date: June 5, 2019
WASHINGTON -- The Motor & Equipment Manufacturers Association (MEMA) participated in an important panel hosted by the Council of the Americas on June 5 to address the recent U.S.-Mexico tariffs and the  potential impacts on both countries.
MEMA Senior Vice President of Government Affairs Ann Wilson represented members on the panel. Other panelists included: former Mexican Ambassador to the U.S. Arturo Sarukhan and former U.S. ambassador to Mexico Earl Anthony Wayne.
“Our members do well when we have regulatory and economic certainty,” Wilson said. “Investment requires that certainty. The whole trade policy this administration has developed has put that certainty at risk.”
President Trump said on June 4 that he would pursue his five-percent tariff threat on Mexico next week. Trump tweeted on May 30 that the tariffs will start to go into effect June 10, then rise by five percent on July 1, August 1, September 1 and October 1. Tariffs will rise to 25 percent if Mexico fails to “stop” the flow of illegal immigrants crossing into the U.S.
“We are the number one importer of goods for Mexico, so we are front and center in this debate,” Wilson said. “By our figures, there’s about $457 million worth of auto parts that cross the border every day.”
The average cost of a car is $35,000 per year. A five percent tariff on it would severely increase the cost for U.S. consumers. And that’s only if parts cross the border once. In most cases, parts cross several times.
Wilson mentioned that the tariff wouldn’t just affect the cost of vehicles. Many other everyday products that U.S. consumers purchase will see jumps in price. For example, because the cost of building delivery trucks would increase, so would the cost of the groceries people buy at their local stores.
On top of increased costs, U.S. jobs will be put in danger because of the tariffs. There are eight wire harnesses in most new vehicles. The difference in each harness requires workers to track wire individually for each one. The jobs are usually held by Mexican workers, but the material used to make the harnesses, such as the connectors and the wire, come from the U.S.
“We are a just-in-time delivery industry,” Wilson said. “Tariffs complicate this and add expense. Tariffs are taxes. There is a tipping point to how much companies can absorb. We are putting jobs in jeopardy and we are putting investments in jeopardy. If you continue to increase the cost of doing business, they will start to shed jobs. Or they will close. And that will affect the entire community they are in.”
The United States-Mexico-Canada Agreement (USMCA) also is in jeopardy because of the tariffs, Wilson added.
“We have been very involved on a renegotiated NAFTA,” Wilson said. “We have come out in support of USMCA. It is the certainty that USMCA would provide. Obviously, the president’s decision last week has put all that at risk.”
Wilson emphasized that the relationship between the U.S. and Mexico is closely interwoven and that both countries prosper when they work together.
“We need to remember we are tied to Mexico,” she said. “It’s been good for the country and the American worker and the American consumer. We are disappointed by these tariffs. We need to get back to the important work of passing the USMCA.”
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