Tariffs Threaten American Manufacturing

Tariffs Threaten American Manufacturing
Sean Kilpatrick/The Canadian Press via AP
Tariffs Threaten American Manufacturing
Sean Kilpatrick/The Canadian Press via AP
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President Trump surged to victory in 2016 on the promise of restoring America’s economic vitality and helping U.S. manufacturers “win” again. Thursday's tariff announcement is a self-imposed setback from the great strides the administration has made toward this goal.

Imposing costly tariffs on steel and aluminum imports will be a painful check on U.S. manufacturing and our economy. Both of our industries depend on steel, aluminum, and other heavy metals as crucial inputs for our manufacturing businesses. Equipment and automobile manufacturers don’t build products with twigs, string, and glue. We need large amounts of steel and aluminum to produce the durable, reliable, safe, and cost-competitive products our customers depend on.

That is why we are joining together to voice our concern over the tariffs and quotas the Trump president has announced on these important manufacturing inputs. Combined, our industries support over 8.3 million direct and indirect American jobs and contribute over $500 billion to the U.S. gross domestic product. A 25 percent tariff on steel imports and a 10 percent tariff on aluminum will undo the very positive effects our industries have enjoyed as a result of the sweeping tax reform legislation passed last year by Congress, and championed by President Trump.

Steel represents approximately 25 percent of the cost of an average automobile. A tariff of 25 percent will have a significant impact on the price of an automobile manufactured in the United States. The impact will also be severe for equipment manufacturers, which are even more steel-intensive in their manufacturing. In fact, the Department of Commerce’s own figures show that while the steel industry employs about 140,000 Americans, downstream manufacturers that consume steel employ about 6.5 million Americans.

The greater irony is that the administration’s tariffs will undercut the president’s own goal of helping American manufacturers win against our global competitors. Our competitors in China, India, and Mexico will get a free pass to use the cheapest steel or aluminum they can find, whereas manufacturers here in the United States will be forced to bear the unfair burden of more costly steel and aluminum. That means U.S. manufacturers will lose out on global business opportunities, and our products will be less competitive here — with American jobs on the line.

President Trump shouldn’t let history repeat itself, because we’ve seen this story before. President George W. Bush imposed tariffs on steel imports in 2002. The economists Laura Baughman and Joseph Francois found through their research that those tariffs cost 200,000 jobs – more than the 187,500 people employed by the steel industry at that time. Ohio, Michigan and Pennsylvania alone accounted for 30,000 of the lost jobs.

We share President Trump’s goal of making the United States the best place in the world for manufacturing businesses. But the decision to impose tariffs on steel and aluminum is misguided — especially when a better course of action for boosting our domestic steel and aluminum industries would be to invest in our infrastructure and streamline costly regulations. The economy is growing and regulatory and tax reform are proving a boon for businesses and American jobs. We cannot afford to reverse this trend.

The punitive measures announced Thursday will only serve to counter the president’s agenda. They are certain to result in retaliatory tariffs from our trading partners that will further harm U.S. industry and upend our economic progress.

The president should reconsider this harmful action. Adopting these tariffs threatens American jobs, hurts American consumers, and imperils the progress that American manufacturers have made under his administration.

John Bozzella is the president and CEO of the Association of Global Automakers, which represents the U.S. operations of international automobile manufacturers.

Dennis Slater is president of the Association of Equipment Manufacturers, which represents manufacturers, parts and service providers for the agriculture, construction, forestry, mining and utility equipment industries.

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