In a letter to the Office of the U.S. Trade Representative (USTR) this week, the Auto Care Association urged the office to adopt a process for its members and stakeholders to request products to be excluded from the latest round of Section 301 tariffs.
Last week, the third list of Section 301 tariffs was finalized, which amounts to $200 billion worth of Chinese imports. The 10% tariff will increase to 25% by the start of next year, the USTR said in a statement. The Auto Care Association says it is concerned that the office’s notice did not mention a product exclusion process, as it did with the first two rounds.
According to the letter from the association, “the administration’s exclusion process set up for products covered in the previous two Section 301 tariff lists provides an important opportunity for stakeholders to mitigate the negative impact these additional tariffs may have on the U.S. automotive industry and U.S. consumers.”
The letter went on to explain that our “supply chains are global and complex. It is not possible to easily or quickly modify supply chains without experiencing a ripple effect. In many cases, companies have no choice manufacturing in China as there are no alternative options due to capacity issues, quality control or customization. Additionally, imposing additional tariffs would increase the price substantially, delaying safety-critical repairs and making it difficult for U.S. consumers to afford cost-effective options when repairing their vehicles. At the same time, we believe a trade war and tariffs will cause severe economic harm to U.S. interests and urge the administration to continue pursuing a bilateral, enforceable, rules-based trade agreement with China.”
On Wednesday, the Auto Care Association testified before the Senate Finance Committee on the tariffs. Bill Hanvey, president and CEO of the Auto Care Association, issued the following statement before the committee:
“The automotive aftermarket is a significant sector of the United States economy, employing 4.6 million people (3.2% of the workforce) and reporting sales of more than $392 billion (2 percent of the nominal GDP). It includes 533,000 businesses that form a coast-to-coast network of independent manufacturers, distributors, retailers and repair shops.
“Imported auto parts are an integral part of the domestic automotive aftermarket supply chain. They are used in both domestic and imported vehicles and are sold to distributors located in every region in the U.S. that, in turn, conduct a logistics symphony to ensure that parts are readily available and reasonably priced for consumers who drive into their local independent shops to service their vehicles. Tariffs will impact the availability and pricing of those parts which will translate to higher prices for auto repairs and delays in repair time, especially considering that there are some parts that cannot be sourced in the U.S.
“A recent economic study completed for the Auto Care Association by John Dunham and Associates found that a 25 percent tariff on imported auto parts could cause a reduction of 17,800 jobs in the auto parts manufacturing sector, resulting in $1.4 billion in lost wages. Furthermore, there would be a 6,800 loss in jobs by the repair shops and a loss of 85,200 jobs in the auto care wholesale and retail segment which is comprised of mostly small and medium-sized businesses.
“The Auto Care Association urges Secretary Ross and the President to listen to the widespread opposition to imposing tariffs on imported auto parts and to conclude that importing these goods is not a threat to national security but rather a necessary component of a thriving domestic automotive industry.”
For more information about the Auto Care Association’s trade initiatives, visit autocare.org/trade.