By Neil Cotiaux
Opposition to the Trump administration’s threatened use of automotive tariffs remains firm in the Upstate as speculation mounts concerning their potential use.
On July 31, about 75 business and civic leaders convened at the Spartanburg Marriott for a briefing on trade and tariffs hosted by the Spartanburg Area Chamber of Commerce.
“We are not here to make your mind up for you,” chamber President and CEO Allen Smith told the audience. “There are a lot of questions in general because all this is speculation at this point.”
In the Upstate, the stakes are high, with a prospective 25 percent tariff on auto and auto-parts imports and possible counter-tariffs bound to affect BMW North America, its supply chain, their workers, and the regional economy at large.
“This has really united the auto industry,” said Kris Denzel, senior director for international policy at the U.S. Chamber of Commerce, who spoke at the event. “The entire auto industry is opposed to this.”
A second presenter, Scott Baier, chair of The John E. Walker Department of Economics at Clemson University, provided a summary of tariffs-related studies from recent decades.
“There are not a lot of historic success stories,” Baier said.
Baier pointed to a more recent study from The Center for Automotive Research, which found that a 25 percent auto tariff would increase the average price of vehicles in the U.S. between $2,450 and $4,400, reduce auto sales, and cut employment in the domestic automotive sector. It also could reduce employment by 1,000 to 2,000 workers in auto manufacturing in South Carolina — with a significant ripple effect throughout the supply chain.
While no representative of BMW attended the Spartanburg Area Chamber’s event — letting the U.S. Chamber’s point person expound on the subject while the company presses its views with federal officials directly and through trade groups — the company continues to tout its economic impact.
Currently, nearly 10,000 jobs at the Spartanburg site are involved in producing 1,400 vehicles daily, with more than 4.3 million vehicles produced since the first car rolled off the assembly line in 1994. About 70 percent of the facility’s production is exported to 140 world markets.
For every direct job created at the Spartanburg plant, three other jobs are created elsewhere in the state, according to the company.
BMW plans to invest an additional $600 million in manufacturing infrastructure for future generations of its X models from 2018 to 2021 and will also create a further 1,000 jobs by 2021, according to its July 16 fact sheet.
When asked whether tariffs could change those plans, Sky Foster, department manager of corporate communications for BMW Manufacturing, suggested that was possible.
“It is clearly BMW’s goal to honor commitments made. We will continue to evaluate applicable situations against stated commitments,” Foster said via email.
Beyond BMW’s own efforts to beat back tariffs, trade allies are also speaking out.
In a July 5 letter to the U.S. Commerce Department, which is now assessing whether auto imports pose a threat to U.S. national security, the president of Robert Bosch LLC, Mike Mansuetti, said tariffs “would disrupt U.S. employers’ global supply chains, hampering investment in the U.S. automotive sector and limiting the ability to broaden America’s economy and open new markets for products made here.”
Last December, Bosch announced it would invest $152 million and create 130 jobs as it grows its automotive electronic components operations in Anderson County, where Mansuetti once served as technical plant manager. Hiring for the positions is underway. It is unclear what impact any tariffs might have on that recruitment process.
The U.S. Chamber estimates that 579,300 jobs in South Carolina are supported by trade and that as of July 2, $3 billion of state exports across a variety of industries were subject to retaliatory tariffs imposed by the European Union, China, Mexico, and Canada.
But with the July 25 agreement by President Donald Trump and European Commission President Jean-Claude Juncker to begin negotiations aimed at “zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods,” some of the threat to state exports may have abated.
Both EU officials and some auto trade groups take the administration at its word that it will hold off on imposing new auto tariffs as those negotiations progress. Nevertheless, work on the Commerce Department’s determination of any national security threat will continue.
As for the ongoing trade skirmishing between the U.S. and China, “There doesn’t appear to be any talks underway to resolve this problem,” Denzel said. One solution, going to the World Trade Organization, may be “a little more difficult now” given the current trade schism between the U.S. and Europe, the U.S. Chamber official suggested.
Regardless of the target country involved, U.S.-imposed tariffs generally do not work out well, Baier said. Tariffs typically result in higher prices, reduced choice in the marketplace, and also spur a decrease in consumption, he said, with employment gains for the protected domestic industry many times marginal.
Smith, the chamber president, knows that businesses in his county — especially those who are part of BMW’s supply chain — want the tariffs issue resolved sooner rather than later.
“The business community thrives on certainty. It’s easy to plan, it’s easy to forecast, it’s easy to hire, it’s easy to project,” Smith said as the meeting adjourned.
Now, they’re waiting for answers.