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Crossfire update: Tariffs take full effect, bringing uncertainty to manufacturing surge

Tough talk on tariffs makes for lively trade debates, but the business reality is prosaic: Transportation equipment manufacturers are especially concerned that U.S. suppliers do not have the capacity to meet domestic demand for critical materials such as aluminum sheet, and about the rising price of finished goods for customers.

The phrase ‘tit for tat’ hardly seems substantial enough to characterize an incipient global trade war. But that didn’t keep politicians, business leaders, and tv-talkers from using the term freely to characterize the Trump administration’s announcement Thursday—and subsequent threats of retaliation—that tariff exemptions for Canada, Mexico, and the European Union would expire June 1.

Opponents in the U.S. wonder why the president would risk jeopardizing an economy that’s going strong, while supporters argue that this is exactly the time to win favorable trade terms. Trading partners—especially those with longstanding and close political ties to the U.S.—are galled with the invocation of “Section 232,” which gives the White House the power to set tariffs based on issues of national security.

In the meantime, U.S. businesses are left wondering: What’s next? Transportation equipment manufacturers are particularly concerned that U.S. suppliers do not have the capacity to meet domestic demand for critical materials such as aluminum sheet, and about the rising price of finished goods for customers.

“It is important to see today’s action in the larger trade environment created by the Trump administration. Auto parts manufacturers are facing trade challenges and uncertainties on several fronts now—including NAFTA renegotiations, Section 232 investigations into automobiles and automotive parts, Section 301 tariffs on Chinese imports, and the Section 232 tariffs on steel and aluminum, now including Canada, the EU, and Mexico, with a concomitant and confusing processes of exclusions and quotas,” said the Motor Equipment Manufacturers Association, responding to the announcement. “Our members could face having to pay double tariffs on some materials necessary to manufacture parts in the U.S. Industries like ours, which require long-term investments in facilities and employees, depend on regulatory and market stability. These actions have thrown all of that up in the air. There is little doubt that the uncertainty and added costs the administration is creating will put U.S. investments and jobs at risk.”

Like MEMA, the Truck Trailer Manufacturers Association has argued that its members are facing multiple tariffs, specifically on specialty-width rolled aluminum sheet. Chinese suppliers are currently the subject of a Section 301 investigation, which pertains to intellectual property protection, and TTMA submitted comments May 11 to the U.S. Trade Representative on the matter.

“Imports of these specialty width products are already subject to a 10% tariff pursuant to the recent actions under Section 232. The small- and medium-sized businesses that make up TTMA’s membership cannot afford to pay an additional 25% tariff to obtain the aluminum they need to produce trailers their customers demand, nor will they be able to pass on a 25% price increase to their customers in the United States,” TTMA wrote, going on to explain the risks of manufacturers becoming dependent on a single domestic supplier. “Creating such a volatile situation for the U.S. truck trailer manufacturing industry cannot have been the Administration’s intent … .”

On Friday TTMA updated members on the status of the tariffs, reminding that the Department of Commerce has a process in place that allows companies to seek product-specific exclusions from the steel and aluminum tariffs. “Thousands of applications for exclusions have already been filed, but none has been granted,” the email notes.

Current events now can be tracked by scanning Twitter, it seems. The president, a Republican senator from heart of steel country, and the PM of Canada weigh in:

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