How Would President Trump’s Steel Tariffs Affect Auto Industry?

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Now that President Trump’s “Made in America” week has concluded, what exactly is the state of Made in America products?

Since the beginning of his campaign, the 45th president has pledged to protect Made in the USA goods and vowed to reverse trade deals and offshoring practices that hurt U.S. workers.

During Made in America week, President Trump delivered a speech in front of manufacturing executives from all 50 states, and he had nothing but kind words for these job creators.

“I want to make a pledge to each and every one of you: No longer are we going to allow other countries to break the rules, steal our jobs and drain our wealth,” President Trump said.

These protectionist policies could have an impact on many American businesses and workers, from coal miners to welders. Today, more than 50% of American made products require welding.

Critics of the president worry that a protectionist trade policy could do more harm than good. For instance, some auto industry analysts predict that increasing steel import tariffs would have a poor impact on auto manufacturers like Ford and General Motors.

However, no one can deny that globalization and automation have hurt U.S. manufacturers, and the steel industry is the perfect example. Steel is a heavily used material that is required in a wide variety of products, and many domestic companies now import this metal rather than sourcing from the U.S. steel industry. And, in most cases, that means importing steel from China.

U.S. Rep. Debbie Dingell of Michigan responded to several questions about the tariffs with an email stating:

Chinese steel overproduction is one of the most significant contributors to American manufacturing job loss. We need stronger trade enforcement to protect against countries who cheat. President Trump should follow through on his promise to hold foreign governments accountable for illegal trade practices that continue to put American workers at a disadvantage.

However, most of the U.S. auto manufacturers actually have been shown to use steel made primarily in the United States already. Regardless, economists believe that steel tariffs would drive steel prices up overall, potentially hurting the auto industry in the process. This could lead to even more consumers purchasing foreign cars rather than domestic ones.

“Prices will go up and people will buy less,” said Alan Deardorff, professor of public policy and economics at the University of Michigan. “It’s ironic that in discouraging imports of steel, he may encourage the imports of cars.”

It is currently unknown what will happen when and if Trump’s tariffs go into effect, but the President is under increasing pressure to act and keep his campaign promises.

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