Trade Groups Say Companies Getting Creative to Deal With Section 232 Tariffs, Quotas
Trade groups that represent steel-consuming industries say it's wrong to think that just because there haven't been massive job losses the tariffs aren't economically significant to their members.
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Paul Nathanson, a consultant who represents the Precision Metalforming Association, said at a George Washington University forum June 3 that the strength of the economy is convincing companies not to cut workers to preserve profit margins. "With 4 percent unemployment rate and a massive lack of skilled workers in this country, they lay somebody off, they’re never going to see them again," he said.
The Motor Equipment Manufacturers Association, which represents 1,000 companies who employ 871,000 in the auto and truck supply chain, has been hard hit by Section 232 tariffs and quotas, said Catherine Boland, vice president for legislative affairs at MEMA. She said one of the companies in MEMA thought it would have to close a factory because it imports Brazilian steel, and that country accepted quotas at 80 percent of previous volumes. She said the company found another supplier and "they're limping along."
The trade group represents giant companies -- in the Fortune 50 -- but also companies with just 50 or 100 employees. She said many large companies, which are Tier 1 suppliers, are cutting slack for their suppliers that have less cushion to deal with the increased raw material costs. She said some are agreeing to a higher per-unit price than had been in the two companies' contracts, because they fear if they didn't, the smaller supplier could close. She said some are even offering loans to the small suppliers so those suppliers can make payroll.
As bad as the steel tariffs have been, a tariff on all Mexican imports would be worse, she said. She said many companies contract with vendors -- or have their own factories -- in Mexico for labor-intensive parts, because of lower Mexican labor rates. Wire harnesses haven't been made in the U.S. for 30 years, she said.
Mike Dankler, the chief of staff to Rep. Jackie Walorski, R-Ind., was asked by a member of the audience why Republicans aren't standing up for free trade. Dankler said his boss, who is a new member of the Ways and Means Committee, has organized letters about the exclusion processes for Section 232 and Section 301 because her arguments to the administration to avoid tariffs go nowhere.
"So when the auto tariffs came along we were able to put together a letter," he said, that had 159 signatures, including dozens of Republicans. He says he tells Republicans' offices: "You’re not going to end up in the president’s Twitter feed" by signing a letter. "This is a way to serve your constituents, express your concerns and not get crosswise with the president."