WASHINGTON—Industry officials are waiting to see the details of a Trump administration draft bill that would substantially change the imposition of tariffs on foreign goods.
The “United States Reciprocal Trade Act” would give the president power to instigate line-by-line tariff increases on goods imported by countries that he determines have raised tariff or non-tariff barriers on U.S. products.
President Trump was expected to propose the legislation Jan. 29 during his State of the Union address. He was compelled to postpone the speech indefinitely after House Speaker Nancy Pelosi told him the House chamber would not be available to him as long as the partial government shutdown is still in force.
Officials of associations representing the tire industry and auto aftermarket said they had heard about the draft bill, but had not yet polled their members for their opinions.
However, they agreed that the tariffs placed by the Trump administration last year on imported steel, imported aluminum and some $200 billion worth of goods were causing great concern among their members.
Anne Forristall Luke, president and CEO of the U.S. Tire Manufacturers Association, noted the group's long-standing opposition to the steel and aluminum tariffs, because the grade of steel necessary for tire manufacturing is not made in the U.S.
Three suppliers of tire-grade steel have applied to the U.S. Department of Commerce, requesting exemptions from the tariffs.
“Commerce hasn't ruled on those petitions yet,” she said. “But they were supported by comments from domestic steel manufacturers, so we're optimistic about those petitions being granted.”
As for the tariffs on Chinese goods, these are problematic for tire manufacturers, according to Luke.
“We have a global supply chain,” she said. “We advocate for free and fair trade, especially for raw materials, equipment and everything necessary to manufacture tires. Tariffs harm every tire maker that has a facility in the U.S., that is building a facility in the U.S. and that plans to build a facility in the U.S.”
Representatives of auto aftermarket associations expressed the same fears.
“Uncertainty is hanging over everybody's head,” said Stuart Gosswein, senior director, federal government affairs at the Specialty Equipment Market Association. “Nobody had this in their budgets for 2019.”
The tariffs on imported steel have affected prices not only on imported steel, but on U.S.-produced steel as well.
“If they're buying domestic steel, there's been a lot of hoarding,” he said. “Domestic companies had to raise prices, which had the same effect as tariffs on imported steel.”
SEMA strongly supports the Trump administration's efforts to curtail Chinese theft of intellectual property, but the president already has sweeping powers to raise tariffs under Section 232 and 301 of the Trade. Section 232 of the Trade Expansion Act of 1962 allows the president to raise tariffs on or use other means against imported goods he deems to threaten national security. Section 301 of the Trade Act of 1974 authorizes the president to take action against any act, policy or practice by another country that violates an international trade agreement or that places a burden on U.S. commerce.
A spokeswoman for the Motor & Equipment Manufacturers Association pointed to the filings its made throughout 2018 opposing the Trump administration's tariff programs.
In a November 2018 submission to the U.S. Department of Commerce, MEMA urged the administration to allow greater flexibility on steel and aluminum tariffs and exempt Mexican and Canadian imports from tariffs.
“Often, there are few (steel) producers in the world—in some cases only one or two—that can source the grade of specialty materials needed to make component specifications,” the association said. “Examples include wire used in steel-belted radial tires and specialty metals used in fuel injectors.”
MEMA, SEMA and the Auto Care Association were among 150 trade associations from a broad range of industries that wrote U.S. Trade Representative Robert Lighthizer in September 2018, opposing the imposition of 10-percent and 25-percent tariffs against goods imported from China.
“Assumptions that U.S. companies can simply move their production out of China are incorrect,” the letter stated. “Global supply chains are extremely complex.
“It can take years to find the right partners who can meet the proper criteria and produce products at the scale and cost that is needed,” it said. “We do not support the U.S. government using tariffs as a means to induce U.S. companies to change their sourcing strategies.”