September 27,2018

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Nicole Hager, 202-224-4515

ICYMI: Hatch Hears From Auto Industry Stakeholders About the Effect of Tariffs

WASHINGTON – The Senate Finance Committee yesterday held a hearing about the effect of tariffs on the U.S. auto industry. During the hearing, Chairman Orrin Hatch (R-Utah) heard from stakeholders about what current and potential tariffs have meant for their businesses. Check out highlights from their exchanges below:

 9.26 autos

Watch the Chairman’s full question and answer session here.


Chairman Hatch to Rick Schostek, executive vice president of Honda North America, Inc: As your company, I think, it now approaching 40 years in the United States, what is at stake with the prospect of tariffs on U.S. imports of autos and auto parts?

SchostekWe came to the United States because we wanted to build product where we were going to sell product, and we found a welcoming environment and grew our footprint step by step…

The problem with the tariffs is tariffs are taxes. And tariffs are going to increase the cost of manufacturing, which is then going to increase prices to consumers, demand will fall and this…will ripple through the entire economy. Tariffs disrupt and distort the market and divert resources that we need to invest in new technologies going forward and undermine the stability of that welcoming environment we first found. So, we see it, sir, as quite a threat.

Chairman Hatch to Steve Gates, dealer principal of Gates Auto Family: As you said one of the most important considerations for your customers is price. What impact would auto tariffs have on your consumers?

Gates: I saw some research that perhaps...we would sell two million cars less. I think it’s greater than that. I know just from my own experience that cars are very price sensitive. It’s all about payment. If cars rose an average of $4,000 to $6,000…$4,000 adds $80 a month to a payment.  Everybody that buys a car cares about the payment. So to me…I think it’s devastating, I don’t think I can survive long term if this occurs.

Chairman Hatch to Michael Haughey, president & CEO of North American Stamping Group: As you noted in your testimony, the supplier industry has already felt the effect of steel and aluminum tariffs. Now these tariffs are costing your company alone $10 million a year. What will the impact of additional tariffs be on your business, as well as the entire supply chain?

HaugheyIt has had a big impact…we’ve started delaying our growth and that’s a big problem for us. We do not import a lot ourselves, we manufacture everything in the country where we use it. But the big effect is going to be if the overall volumes of the industry go down. We’re selling parts for cars that may be supported by import components. We’ve had one layoff in the history of our company, back in 2009, and if volumes go down, that’s where we become very susceptible to…our team members.

Chairman Hatch to H. David Britt, chairman of economic development and Spartanburg county council member: The auto industry is highly integrated and auto makers create a great deal of opportunity in the communities in which they operate. How dependent is your community on the health of the automotive industry?

Britt: Mr. Chairman, I mentioned the 25 years that we’ve had of growth since BMW first announced in 1992. It’s very important to realize in South Carolina we’re still very tied very carefully into what’s going on in the automobile side. With BMW being so tied into Spartanburg and South Carolina…it’s not just the employees there, the 10 thousand employees at BMW…very few parts are made by BMW that goes into their vehicles…in fact BMW only makes the engine for the most part. So all those other components are made by the supplier network. In Spartanburg, if BMW can’t sell the number of vehicles that they have in the previous year…this ripples all across Spartanburg and South Carolina and it is very, very serious and very dangerous.

Background: In May, Hatch called the Department of Commerce Section 232 investigation into imports of automobiles, trucks and automotive parts deeply misguided and expressed frustration with the administration’s decision to impose steel and aluminum tariffs from the European Union, Canada and Mexico. In June, Hatch convened a Finance Committee hearing with Commerce Secretary Wilbur Ross about the administration’s use of Section 232 investigations.