Auto Industry Execs Talk Trade, Tariffs
As the trade agreement among the U.S., Canada and Mexico hangs in limbo after the U.S. declined to renew it, automotive industry leaders are urging collaboration on the continent, along with a retooled approach to tariffs.
A recent roundtable discussion of U.S. and Canadian automakers, auto industry suppliers, researchers and others dissected the negative effects of U.S. tariffs on the sector and compiled a trade policy wish list participants say would ease the pressure.
The Center for Automotive Research-led discussion centered on how tariffs have impacted manufacturing, supplier finances, research and development, and competitiveness. Participants agreed that the fast-changing duties have increased their costs and business uncertainty when they need to invest in technology, production capacity and talent instead.
“Trade policy has significant implications for where companies invest, how supply chains are structured and whether critical programs move forward,” said the nonprofit center’s president and CEO, Elizabeth Krear.
“When policy changes faster than the industry can realistically adjust its sourcing, tooling and production footprint, the result can be less investment, not more. Long-term competitiveness requires predictable policy and a coordinated North American strategy.”
Roundtable participants outlined a list of challenges tariffs have brought: insufficient transition periods that don’t allow for long lead times needed to adjust; delayed programs and reduced capital spending and other cost-cutting; longer lead times and higher costs of domestically made machines; reduced R&D and talent-recruitment spending; supplier financial strain; added cost and uncertainty from changing and complex tariff policy.
“Participants cautioned that these pressures can weaken the same domestic supplier and manufacturing capabilities that trade policy is intended to strengthen,” says a report on the discussion.
Industry representatives said North American trade ties should be maintained due to the highly integrated nature of its auto industry. “… treating North American allies in the same manner as overseas competitors can create unintended consequences for U.S. manufacturers, suppliers and automotive states,” the event report said, pointing out the Great Lakes region of Michigan as particularly exposed to disruption.
They urged policy makers to phase in any future tariff changes and make policy consistent; support advanced manufacturing and automation to address labor shortages; streamline permitting and cut compliance requirements for North American production and trade; and set tariff policy with broader competitiveness in mind. They urged that the North American trade policy be retained and strengthened.
“The United States cannot strengthen its automotive industry in isolation from Canada and Mexico,” Krear said. “A competitive North American industry requires policies that recognize how the region actually designs, sources and builds vehicles.”