Add the Motor & Equipment Manufacturers Association (MEMA) to the host of business and trade groups that oppose the Trump Administration’s proposed tax on goods imported from Mexico. The tariff rates would rise incrementally, from 5% beginning June 10 to 25% by October unless “the illegal migration crisis is alleviated through effective actions taken by Mexico,” according to a June 30 White House statement.
MEMA notes that the organization shares President Trump’s concerns about security at the U.S.-Mexico border, but that imposing tariffs “will not provide a more secure border.”
“Tariffs on Mexican goods coming into the United States will only serve as an additional tax on the American people by increasing the cost of goods and putting jobs and investment in the U.S. at risk,” MEMA says. “In short, this action will undermine U.S. economic stability.”
Mexico is a critical trading partner for the motor vehicle parts industry, which is the largest sector of manufacturing jobs in the U.S. In 2018, two-way trade with Mexico in auto parts totaled $165 billion—or $452 million worth of goods a day, according to MEMA. Widely applied tariffs on goods from Mexico will raise the price of motor vehicle parts, cars, trucks and commercial vehicles—and consumer goods in general—for American consumers.
This action also puts the U.S.-Mexico-Canada Agreement (USMCA), an essential trade deal with Mexico and Canada, at serious risk. The U.S. automotive industry is dependent on economic certainty and a strong North American supply chain. For that reason, MEMA has announced its support of USMCA.
“This agreement must be in place for our industry to continue to support manufacturing job growth in the U.S. The potential ripple effects of the proposed Mexican tariffs on U.S., North American and global trade efforts could be devastating,” says MEMA.
Already uncertainty abounds in the automotive parts industry. Sales of motor vehicles and motor vehicle production has dropped from a 2016 peak. Section 232 steel and aluminum tariffs on allies like Europe and Japan, the looming possibility of additional Section 232 auto tariffs, and the significant tariffs already imposed as well as additional threatened new tariffs on more than $500 billion in U.S. imports from China perpetuates and increases the stress and uncertainty of U.S. manufacturers. The proposed tariff on Mexican goods only serves to increase this anxiety and unease, and to further undermine American businesses’ stability and job growth.
“MEMA strongly urges President Trump to withdraw the threat of tariffs on Mexican imports and to return to the important work with Congress to ratifying the USMCA,” the MEMA statement concludes. “The approval of the USMCA will provide the American people and the motor vehicle parts industry with stable, long-term manufacturing and job growth in the United States as well as the benefits of a stable and secure trading relationship with Mexico and Canada.”
Other prominent groups opposing the tariffs on Mexico include the US Chamber of Commerce, which calls the plan “exactly the wrong move”; Alliance of Automobile Manufacturers; National Retail Federation; and the Business Roundtable.