WASHINGTON — U.S. auto parts suppliers could suffer considerable hardships if the federal government places additional tariffs on imported auto parts, Bill Hanvey, president and CEO of the Auto Care Association (ACA) said in testimony this week before the U.S. Trade Representative (USTR).
"Margin pressure and cash-flow impact of financing the tariff are causing severe financial stress," Mr. Hanvey said before a USTR hearing June 18 on the fourth Section 301 tariff list on imports from China.
Mr. Hanvey also told the hearing that the tariffs are making American roads less safe as consumers put off "safety-critical" maintenance in the face of higher prices.
Section 301 of the Trade Act of 1974 authorizes the president to take appropriate action to obtain the removal of any act, policy or practice of a foreign government that violates an international trade agreement or burdens U.S. commerce.
Retaliatory action, including tariffs, is defined as appropriate under Section 301.
While the ACA and its members support the Trump administration's efforts to address China's unfair trade practices, China remains a critical trading partner and manufacturing hub in the auto aftermarket's supply chain, Mr. Hanvey said.
"Many of our members are being forced by their distribution customers to absorb cost increases that are related to the tariffs, placing a heavy financial strain on their bottom line," he said.
"Some retailers are just starting to accept cost increases passing through the supply chain and raising prices on consumers," Mr. Hanvey said.
Some ACA members have been able to shift production or source outside of China, at a higher cost than China, but lower when the tariffs are considered.
"For products without an alternative source already in existence in another country, it could take six to 18 months, and likely years, to find and quality a new source," he said.
"We hope the administration will consider the severity of imposing tariffs and will continuing engaging to dialogue with China to protect U.S. investments," Mr. Hanvey said.