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MEMA Continues to Voice Anti-Tariff Message to Trump Administration

Date: September 7, 2018
In formal comments submitted on Sept. 6 to the United States Trade Representative (USTR), MEMA again argued that extensive tariffs on goods from China could cause job losses and increases in costs to consumers here in the United States while not solving the very real problem of intellectual property (IP) theft.
The comments were addressed to U.S. Trade Representative Robert Lighthizer after a request for public comment on the third proposed list of Section 301 tariffs, which are aimed to stop intellectual property theft and other unfair trade practices in China.
“Tariffs on the motor vehicle materials and products included on the USTR’s proposed list will have a disproportionate and significant harmful impact on U.S. consumers who rely on affordable products for the repair and maintenance of their vehicles,” MEMA’s comments said. “Motor vehicle component and systems manufacturers will also face significant cost increases as well, which could lead to job losses. The increased costs due to tariffs will threaten the success of small- and medium-size U.S. businesses and their employees that depend on a reliable supply of automotive materials, subcomponents and parts to make repairs to automobiles. Tariffs on these products could lead to downsizing, layoffs, or even cause certain U.S. production to move overseas.”
“MEMA’s members invest heavily in innovation and understand the importance of IPR protection to the sustained success of the motor vehicle parts manufacturing industry. While MEMA supports the administration’s push for robust IPR protection in China, the proposed 25 percent ad valorem rate of duty on certain parts and equipment imported by vehicle suppliers from China is not the solution to these problems,” the comments say.
The comments conclude that many items subjected to the tariff “are not products within the scope of China’s advanced industrial initiatives and are not advanced technologies at risk for technology theft and IPR infringement in China.”
In August MEMA testified for the third time before the USTR regarding this new round of tariffs that the Trump administration is proposing to leverage on hundreds of billions of dollars of Chinese goods. The trade action taken by the Trump administration, known as the Section 301 tariffs, imposed 25 percent tariffs on $34 billion worth of Chinese imports on July 6 as a remedy to unfair trade actions related to IP theft and technology transfer. In addition, the administration imposed a second round of tariffs on August 23, applying 25 percent duties on an additional list worth $16 billion. This third round of potential tariffs could be between 10 and 25 percent on a list worth $200 billion.
Throughout its effort, MEMA’s message to the Trump administration has been consistent: 1) the proposed tariffs on the listed products will cause disproportionate harm to U.S. interests by disrupting American manufacturing operations and increasing costs to both U.S. producers and consumers, 2) the increased costs will create a significant harmful burden, particularly on small and medium businesses: this includes the possibility of forced bankruptcy and loss of income, and 3) the exclusion process needs to be clear and transparent. Additionally, MEMA has outlined areas of agreement with the trade actions.
MEMA has repeatedly stated that tariffs to remedy intellectual property violations in China should be applied with greater precision and not as broad-based tariffs that could affect consumers and businesses. Suppliers operate in a global supply chain of domestic and international suppliers and customers. China is a large and important trading partner for our industry, with many U.S. motor vehicle suppliers maintaining manufacturing facilities in China to service Asia and the rest of the world. Domestic capacity is simply not available for some of the necessary materials and parts from China relied on by suppliers.
The full text of MEMA’s comments can be viewed here. For more details about the 301 tariffs and other trade actions affecting the motor vehicle supplier industry, visit the MEMA Trade Resources Page.
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