If Tariffs Not Solution, How to Increase U.S. Jobs?

TRAVERSE CITY, MI – Many believe the Trump Admin.’s tariffs will harm, rather than help, U.S. automotive jobs, as they will raise the cost of vehicles and their components.

But if tariffs aren’t a solution, what can be done to increase U.S. automotive employment?

That was the question to a panel on current international trade issues at Wednesday afternoon’s 2018 CAR Management Briefing Seminars here.

“I don’t think tariffs are a strategy in and of itself, but I think they create a space to have some conversations that were going nowhere. One of those is with respect to overcapacity in commodities like steel,” says Scott Paul, president-Alliance for American Manufacturing.

Paul says he would like to see a “coalition of the willing” formed, “to really quarantine market-based economies from the effects of this overcapacity, which is generated from China and other countries.”

He also would like to see more investment in U.S. infrastructure and “way more” investment in public-private partnerships to bring innovation more quickly to the factory floor.

“The tariffs will have been wasted if we have none of these conversations,” Paul says.

Both he and Paul Ryan, a vice president at the Association for Global Automakers, agree more investment in workforce training also is crucial to protect and raise employment in the U.S. auto sector.

Says Ryan: “On the manufacturing side, we have jobs that frankly are going wanting – jobs we can’t fill because we don’t have enough people in the workforce with advanced manufacturing skills.”

Soumaya Keynes, U.S. economics editor at The Economist magazine, supports a rules-based trading system.

“A rules-based trading system can be a good thing,” she says. “If I were the President of the United States, I’d essentially be thinking how to set up a system where you’d have a level playing field. And then if there isn’t a level playing field, think about what that underlying problem is in the system and try and solve that more directly.”

She mentions subsidies in China as one of those underlying problems. The U.S. and Mexico have accused China of giving subsidies, illegal under World Trade Organization rules, to Chinese companies so they can raise their exports.

The WTO, of which the U.S. is a member, is a rules-based trading system, although the White House has argued it has not been effective in creating a level playing field.

AAM’s Paul notes, “There is a perpetual oversupply of steel in the global market.”

China has provided 75% of that oversupply, and its steel overcapacity is four to five times what the U.S. even makes in steel each year.

The Trump Admin. has placed 25% tariffs on imported steel and aluminum from China, as well as 25% tariffs on imported steel and aluminum from Europe, to protect U.S. steel manufacturers and spur investment in the sector domestically.

But some, such as the AGA’s Ryan, argue there are certain specialty steels the U.S. auto industry uses that are unavailable in the U.S. nor are expected to be, and thus tariffs on those products are unfair.