WASHINGTON — Tire, auto and labor interests reacted hopefully but cautiously to two major trade moves made recently by President Trump.
First, on Nov. 30, Mr. Trump joined Canadian Prime Minister Justin Trudeau and outgoing Mexican President Enrique Pena Nieto in signing the U.S.-Mexico-Canada Agreement (USMCA), which is designed to replace the North America Free Trade Agreement (NAFTA).
Second, on Dec. 1, the White House announced that the U.S. and China would suspend new tariffs for 90 days while they held new talks over a possible trade agreement.
Also, the Trump administration will postpone the Jan. 1 start date for 25-percent tariffs on some $200 billion worth of Chinese goods, including tires, rubber chemicals, manufactured rubber goods and synthetic and natural rubber.
In return, China said it would buy a "very substantial" amount of U.S. goods in the agricultural, energy, industrial and other sectors, the White House said.
If trade talks fail, the 25-percent tariffs will be instituted, the White House said.
The U.S. instituted 10-percent tariffs on those goods in September 2018, saying they were necessary because of unfair Chinese trade practices. China retaliated almost immediately with tariffs on $60 billion worth of goods imported from the U.S., including tires.
Both events came out of the G20 economic summit in Buenos Aires, where Mr. Trump held high-level talks with Chinese President Xi Jinping.
As for the USMCA, Mr. Trump called it "the most modern, up-to-date and balanced trade agreement in the history of our country, with the most advanced protections for workers ever developed."
The White House and the Office of the U.S. Trade Representative issued several fact sheets about the trade deal and its provisions to help U.S. manufacturing.
Among other things, the fact sheets said, the USMCA will:
- Require that 75 percent of automobile content be made in North America, up from 62.5 percent under NAFTA.
- Require that 40 to 45 percent of vehicles be made by workers earning at least $16 per hour.
- Maintain NAFTA's provisions on duties, taxes and specific customs processing fees for goods originating in North America, while adding provisions for greater transparency in import and export licensing.
- Prohibit requirements to use local distributors for importation or place restrictions on used and remanufactured goods.
- Require all parties to adopt and practice labor rights as recognized by the International Labor Organization.
"We praise this positive step, which reconfirms the importance of free and fair trade among the three countries," the U.S. Tire Manufacturers Association (USTMA said about the signing of the USMCA. "We look forward to the next steps in this process."
But the United Steelworkers union (USW), which was harshly critical of NAFTA, said the USMCA still needs revision if it is to safeguard U.S. jobs and labor rights.
"Today's signing is an important milestone, but it is only another step in the process to reform NAFTA," the USW said in a Nov. 30 statement.
U.S. workers have struggled for the last 25 years with the negative effects of NAFTA, according to the union.
"NAFTA and implementing legislation must reverse the corporate incentives to outsource production and instead promote investments in plants, equipment and people domestically," it said.
The recent announcement by General Motors Co. that it would close five North American plants and lay off 15,000 workers "is clear evidence that corporations are only interested in profits," the USW said.
The USW's criticisms were echoed by pro-labor Rep. Tim Ryan, D-Ohio.
"Although I'm encouraged that that the U.S., Canada and Mexico moved to find a solution, the newly signed deal does not go far enough to protect American workers," Mr. Ryan said. "It's time we put American workers first."
The retreading advocacy group Retread Instead is taking no official position on the administration's decision to postpone the higher tariffs.
Retread Instead was formed in direct response to the International Trade Commission's February 2017 decision not to approve countervailing and antidumping duties against truck and bus tires imported from China, according to Ron Elliott, marketing, communications and ISM manager for Marangoni Tread North America Inc. and spokesman for Retread Instead.
“China is a non-market economy that dumps low-quality, non-retreadable truck tires into the U.S. below fair market value, thus undermining the retread industry,” Mr. Elliott said.
Retread Instead is concentrating on more permanent solutions to the problem of Chinese imports, such as filling currently vacant commissioner seats at the ITC to ensure a fair hearing for retreaders, according to Mr. Elliott.
“Retread Instead will continue to spread the word throughout Capitol Hill that there are well over 100,000 U.S. jobs in retreading and related industries that are being threatened by the importation of non-retreadable truck and bus tires from China that are sold at below fair market value,” he said.
Among other commenters, the National Association of Manufacturers (NAM) expressed pleasure that the USMCA is trilateral, as NAFTA was. Before the U.S. and Canada reached agreement late on Sept. 30, there were fears that the Trump administration would make a trade deal only with Mexico, because of disputes between the U.S. and Canada centering mainly on dairy and agricultural issues.
"Manufacturers called for a trilateral agreement, and this moves us one step closer to restoring certainty to the North American market, the biggest market for U.S. exports in the world," NAM said.
"By securing the relationship with our North American allies, we are all better positioned to demonstrate a strong and united front against China's unfair trade practices and end the harm they may inflict on manufacturers in America," it said.
The Motor & Equipment Manufacturers Association (MEMA) also said the signing of the USMCA was a step forward for all three of the signatory countries.
"The success of our industry and the continued employment of hundreds of thousands of Americans depends on a strong, functioning North American supply chain," MEMA said.
However, MEMA joined auto makers in saying that the USMCA's benefits would be severely mitigated unless the agreement exempts Mexican and Canadian steel and aluminum imports from the tariffs instituted last March by the Trump Administration.
"USMCA will not create the desired opportunities for the United States without addressing steel and aluminum tariffs," the association said.
Regarding the announcement on U.S.-China tariffs, MEMA — which opposed the tariffs instituted in September — said the truce would reduce the risk of an ongoing trade dispute with China.
"We hope that this will serve as a starting point for additional negotiations, and an agreement in the future that will allow U.S. companies to remain competitive in a global marketplace while protecting intellectual property rights," MEMA said.
The Auto Care Association (ACA), which also opposed the tariffs, joined with MEMA in welcoming the announcement.
"Tariffs inhibit the growth of our industry and make it more expensive for consumers to maintain and repair their vehicles," ACA President and CEO Bill Hanvey said.
"Further, we are encouraged by the Trump administration's commitment to engaging with the Chinese government in order to reach an agreement with respect to forced technology transfer and intellectual property protections," Mr. Hanvey said.
The fate of both the USMCA and the U.S.-China trade talks are uncertain at this point.
The USMCA must be approved by the national legislatures of all three countries, and some Democrats in Congress already have condemned the agreement for what they see as inadequate protections for workers and the environment.
As for the U.S.-China trade deal, financial markets reacted nervously to the lack of detail about the proposed agreement and its prospects for becoming reality. On Dec. 4, the Dow Jones Industrial Average fell 799.36 points, losing 3.1 percent of its value.