Supplier group wants Pence, Ross meeting on border tax, NAFTA

By Stephanie Hernandez McGavin, Crain News Service

DETROIT, Mich. — The Motor & Equipment Manufacturers Association (MEMA) wants to meet with U.S. Vice President Mike Pence and Secretary of Commerce Wilbur Ross to raise concerns over proposed changes to border taxes and the North American Free Trade Agreement (NAFTA).

In a letter sent March 1, the association sought to discuss trade and tax reform with the vice president. MEMA opposes a border adjustment tax, but it is unclear whether the topic would be the focus of a conversation with Mr. Pence.

Pointing to the nation's trade deficit, the Trump administration, has proposed a border tax as one tool to encourage more U.S. manufacturing jobs and discourage the import of manufactured goods. Mr. Trump has singled out Ford Motor Co., Toyota Motor Corp., General Motors Co. and BMW A.G. for plans to import vehicles to the U.S.

Mr. Trump also has vowed to renegotiate NAFTA, a sweeping trade pact between the United States, Mexico and Canada, with terms more favorable to creating U.S. jobs.

According to MEMA, a border adjustment tax could set off a “ripple effect,” increasing costs to manufacturers while decreasing available capital — which would end up raising prices for consumers, reducing sales and, in the end, reducing manufacturing jobs that Mr. Trump wants to expand.

In a Feb. 28 letter to Mr. Ross, the automotive supplier association cautioned that any changes to NAFTA must not “risk disrupting” supply chains, “radically” increase production costs or reduce available capital, which could affect job growth.

“Manufacturing jobs in this industry are rapidly increasing, going up nearly 20 percent since our last [jobs and economic impact] report in 2012,” MEMA CEO Steve Handschuh said in a statement sent to Automotive News. “This is due in part to an integrated supply chain within the North American market.”

The association noted in a press release that U.S. suppliers both import and export parts throughout the North American market: Parts exported across the border are often combined with others, only to be imported back to the U.S. for final assembly.

Since auto suppliers make up the largest portion of manufacturing jobs, Mr. Handschuh said, it would benefit Trump administration officials to sit down with the association.

This report appeared in Automotive News, a Detroit-based sister publication of Tire Business.