Trump tariffs get TN criticism and cause concern over economic impact

Republicans are bitterly protesting the Trump administration’s decision to impose sweeping tariffs on U.S. allies with Tennessee’s two U.S. senators among them. Economically, there are suggestions Tennessee could suffer more than most states because of reliance on vehicle manufacturing and, politically, Politico reports Republicans are alarmed that the White House ignored their frenzied lobbying campaign and afraid that the party could suffer at the polls in November.

The GOP’s free-traders were mollified this spring as the Trump administration exempted U.S. allies from steel and aluminum tariffs imposed on other countries like China. But on Thursday, that all changed as President Donald Trump imposed 10 percent tariffs on aluminum imports and 25 percent tariffs on steel imports from the European Union, Canada and Mexico.

The move thrusts the GOP back into an internecine war over free-trade policies that have defined the party for decades, just as Republicans mobilize for a hotly contested midterm campaign.

…Senate Foreign Relations Chairman Bob Corker called the move an “abuse of authority only intended for national security purposes.”

“This is a big mistake. These tariffs will raise prices and destroy manufacturing jobs, especially auto jobs, which are one-third of all Tennessee manufacturing jobs,” said Sen. Lamar Alexander (R-Tenn.), who said tariffs are “basically higher taxes on American consumers.”

Most Republicans believed that the Trump administration’s tariffs on aluminum and steel would be relegated to China and that exemptions for allies would continue into the summer. So Congress was largely blindsided by the administration’s reversal.

From The Tennessean:

Nearly 1,000 auto suppliers operate in Tennessee and manufacturers built more than 830,000 vehicles in the state in 2016, with exports approaching $6 billion, according to the Tennessee Economic & Community Development office. More than 135,000 Tennesseans work in the auto sector. 

“You are putting a major uncertainty around a significant commodity market,” said Bradley Jackson, CEO of the Tennessee Chamber of Commerce & Industry. “You can imagine some disruption that can occur, and that will have a ripple impact especially in Tennessee with the base that we have for automotive manufacturing.”

Jackson pointed to the auto sector as the state’s main focus for economic growth. As new requirements have been issued on fuel consumption and companies have sought to make vehicles lighter, demand for aluminum has significantly increased in Tennessee.

“Aluminum has become a major component of the automotive industry,” Jackson said.

…Volkswagen, which has operations in Chattanooga, did not respond to requests for comment. Nissan and General Motors Co., with Middle Tennessee facilities, referred to statements from auto associations asking the administration to re-evaluate the tariffs.

“It is not just auto assembly plants like Volkswagen and Nissan and General Motors but it is also these parts manufacturers which would also be using metal products,” said University of Tennessee at Knoxville economist Bill Fox. “They are spread all over Tennessee and so the impact on Tennessee is broader than just the Chattanaooga and Nashville area.”

Metal price increases could lead to higher costs for making parts and cars, which could lead to fewer cars made, Fox said.