Trump’s Trade Policies are Devastating America’s Largest Manufacturing Sector

October 24th, 2018

The U.S. auto parts sector is the largest source of manufacturing jobs in the United States, employing about 871,000 Americans. However, as President Donald Trump touts the importance of increasing U.S. manufacturing jobs, his trade policies are placing an unsustainable strain upon auto parts manufacturers which could result in job losses across the entire sector.

Trump’s tariffs on steel and aluminum, duties levied against Chinese goods, and lack of a functional exemptions process have created the perfect storm for manufacturers of auto parts.  Ann Wilson, senior vice president for government affairs at the Motor and Equipment Manufacturers Association, told attendees at a recent event at the National Press Club that these policies have pushed the sector to “a breaking point.”

Ramzi Hermiz, president and CEO of Shiloh Industries, an auto parts manufacturer based in Valley City, Ohio, concurred with Wilson noting, “It’s a thin margin business. You will see a large number of suppliers go through significant distress.”

Trump’s tariffs could cause an industry with thin margins to become even thinner, further reducing industry investment in technology and other critical areas. As Hermiz said, “you can’t invest in technology. You can’t buy capital to localize.”

Consequently, Trump’s trade policies are undoubtedly going to exacerbate an already serious problem in the auto parts sector- a shortage of trained workers. While the sector currently supports around 871,000 jobs, there are still many jobs that go unfilled, and tariffs and increased auto regulations do nothing to address this serious problem. Wilson made it clear saying, “unless and until we have a trained workforce, we’re not going to be able to meet the administration’s goal” of boosting manufacturing employment.

If the Trump administration hopes to boost U.S. manufacturing employment, the first step that must be taken is to remove their burdensome and frivolous trade restrictions against key U.S. allies, especially Mexico and Canada. In doing so, the auto parts industry would be able to direct its focus to training and hiring more Americans, rather than navigating uncertainty and the devastating threat of higher auto duties.