For over a century, the mills of Spartanburg, S.C., were the heart of American textile manufacturing, David Britt recalled. When they began to close in the early 1990s, more than 25,000 workers lost their jobs.
That was the dreary employment landscape that the German automaker BMW helped revitalize when it decided to build a plant in the region in 1992, Britt told the Senate Finance Committee during a hearing Wednesday on President Trump’s proposed automobile tariffs.
Twenty-six years and $9.3 billion later, that BMW plant is the largest U.S. auto exporter, producing over 1,400 cars a day, said Britt, a member of the Spartanburg County Council since 1991 and the chairman of its economic development committee. Rivals, including Mercedes and Volvo, also have operations in the state.
[Related: BMW curbs 2018 profit forecast due to Trump’s tariffs, new emissions rules]
“We are poised for even brighter days to come,” Britt said, “provided these tariffs do not put their foot on the throat of growth.” For South Carolina and for the auto industry, it’s a real risk: Trump’s Commerce Department is evaluating duties of as much as 25 percent on cars and car parts, and the president has already imposed levies on steel and aluminum imports as well as $250 billion of Chinese goods.
The price of a car, already the second-most expensive purchase most Americans will ever make, might rise as much as $7,000. Along with Trump’s other protectionist moves, the duties threaten to undermine vibrant economic growth fueled in part by last year’s double-digit corporate tax cuts.
“Our focus should be building on the benefits of historic tax reform achievement earlier this Congress,” said Sen. Orrin Hatch, the retiring Utah Republican who chairs the finance committee. “Our trade policy should strengthen our relationships with our allies, while targeting China’s most harmful trade practices. Tariffs on autos and auto parts are not going to help us achieve any of these things.”
Indeed, automotive manufacturers are already grappling with higher prices for American steel and aluminum, Rick Schostek, the executive vice president of Honda North America, told senators. Adding duties to cars and car parts “will put American workers, consumers, communities and the economy at risk,” he said. “That’s what Honda has joined every automaker in the U.S.” in opposing them, he said.
Carmakers from General Motors, the American icon behind vehicles including the Chevrolet Camaro, to foreign manufacturers like BMW and Volvo previously warned the Commerce Department during a mandatory public-input period that the duties would push up their supply costs, curb American exports and, ultimately, cost well-paying jobs that the president has promised to increase.
“Import tariffs could lead to a smaller GM, a reduced presence at home and abroad,” and risk less — not more — manufacturing positions, the Detroit-based carmaker, which has a U.S. payroll of 110,000, said in a written submission to the agency.
The potential risk from the duties grows, the company said, when combined with Trump’s widening trade disputes with China as well as with traditional U.S. partners like Europe and Canada.
Trump’s policies also erode a business-friendly reputation that the U.S. has spent decades nurturing, Honda’s Schostek told the Senate panel.
“The process of developing a new vehicle takes several years, and each vehicle represents hundreds of millions of dollars of investment and advance planning,” he explained. “This is where disruptions like new taxes in the form of tariffs come in. These taxes represent additions to the cost of building a vehicle, costs that must be either passed on to our customers or borne by manufacturers, and this diverts money intended for other critical investments.”
While Trump has largely dismissed such worries, promising his policies will pay off in better trade deals, the hearing indicated that backers are starting to grow frustrated.
“I keep hearing, ‘Be patient, the president has a plan,” said Britt, the councilman from Spartanburg County, a region intersected by Interstate 85 just south of the North Carolina border. “Well, our trading partners and citizens are running out of patience. They have their lives and futures at stake. Our neighbors are asking themselves, ‘Can we afford to buy a new home or car with a trade war looming?’ Companies are asking, ‘Can we risk this investment in a new or existing facility”‘”
