Auto Service World
News   June 7, 2019   by Renee Montague

Trade uncertainty is hurting business: MEMA VP

U.S. president Donald Trump’s repeated threats of new and increasing tariffs are hurting industry, a leading aftermarket executive says.

Ann Wilson, senior vice president of government affairs for the Motor & Equipment Manufacturing Association (MEMA) told attendees at a Council of the Americas event Wednesday that threats of tariffs and trade wars is bad for business.

“Our members do well when we have regulatory and economic certainty,” she said. “Investment requires that certainty. The whole trade policy this administration has developed has put that certainty at risk.”

President Trump has said that he would pursue a five per cent tariff on Mexico if it does not stem the flow of immigrants to his country’s southern border. The five-per-cent tariff would grow monthly by five per cent until Mexico complied.

“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.”

Other panelists at the event included former Mexican Ambassador to the U.S. Arturo Sarukhan and former U.S. ambassador to Mexico Earl Anthony Wayne. According to the Council of the Americas, the webcast of the panel discussion received more than 8,500 live views from nearly 7,000 unique live viewers around the world.

Wilson pointed out the impact tariffs would have on the cost of vehicles. 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.

And the tariff wouldn’t just affect the cost of vehicles. Many other everyday products that U.S. consumers purchase will see jumps in price such as groceries because the cost of building delivery trucks would increase.

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,” she 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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