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MEMA Calls for Immediate Release of Section 232 Tariff Report

Date: February 18, 2019
MEMA is alarmed and dismayed that the Department of Commerce’s report on Section 232 tariffs on motor vehicles and motor vehicle parts will not be made public immediately. It is critical that our industry have the opportunity to review the recommendations and advise the White House on how proposed tariffs, if they are recommended, will put jobs at risk, impact consumers, and trigger a reduction in U.S. investments that could set us back decades. Secrecy around the report only increases the uncertainty and concern across the industry created by the threat of tariffs. MEMA calls for the immediate and full release of the report.
Motor vehicle suppliers directly employ over 871,000 U.S. workers, with a total employment-induced impact of 4.26 million jobs. Suppliers are the largest sector of manufacturing jobs in the nation and generate 2.4 percent of the U.S. GDP. Many suppliers import certain automotive parts (including electronic control units, bearings, and valves) as inputs that are then manufactured into higher technology or more complex parts here in the U.S. Open markets and integrated supply chains provide a proven framework for economic growth and jobs in our industry.
If these tariffs are imposed, the first impacts will be felt by smaller suppliers. Usually North American-based, smaller supplier manufacturers’ two largest costs are raw materials/inputs and salaries. These suppliers are already paying significantly more for their raw materials due to tariffs on steel and aluminum. If Section 232 tariffs are implemented, suppliers will have no choice but to lay off members of their workforce.
But the impacts would be long-term and far reaching. Every single U.S.-made car and truck has imported components and assembly. Tariffs on autos and auto parts would affect every make and model sold in the U.S. and would result in higher prices for all vehicles. The average cost of a vehicle in the U.S. already exceeds $35,000.  But tariffs of the magnitude made possible by Section 232 tariffs on autos and auto parts will increase the cost of a vehicle by $7,000. This will impact demand at a time when all analysts agree that vehicle sales in North America have reached their high point and we are no longer in a growth period.
Investment in the U.S. by suppliers will suffer under these ill-advised tariffs. The ongoing uncertainty due to changing trade policies is already discouraging new investment, and additional tariffs from the 232 auto investigation will hinder future investment even more. These tariffs, if applied, could move the development and implementation of new automotive technologies off shore, leaving America behind. If we lose the opportunity to develop and manufacture new technologies in the U.S., we will have little opportunity to recoup these losses for a decade or more.
MEMA’s message to the White House remains clear: the cumulative effect of these tariffs-- in addition to Sec. 232 tariffs on imported steel and aluminum and Sec. 301 tariffs on imports from China – will be devastating.  Small and medium motor vehicle parts manufacturers are particularly susceptible to increased costs, squeezed margins, and added burdens. The importation of motor vehicle parts is not a risk to our national security, and not a single company in the domestic auto industry requested this investigation. To the contrary, the imposition of these tariffs would put our economic security and leadership in technology in jeopardy. 
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