US Tire Manufacturers Association asks Department of Commerce(DOC) to exclude certain types of steel from tariff investigations

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The U.S. Department of Commerce (DOC) is investigating the national security implications of steel imports, and the U.S. Tire Manufacturers Association (USTMA) has testified consumers, as well as the U.S. military, depend on tires and the availability of certain imported steel is critical.

The USTMA, the new name for the Rubber Manufacturers Association, has asked that specific types of tire cord-quality steel wire rod, tire cord and bead wire be excluded from the DOC tariff investigation since domestic suppliers cannot meet volume and quality needs for this vital tire component.

“Tire manufacturing is vital to the U.S. economy,” testified Tracey Norberg, USTMA senior vice president and general counsel. “Tires manufactured by USTMA members safely transport millions of Americans and millions of tons of goods each day throughout the United States. In addition, the U.S. military depends on the tire manufacturing industry to supply tires to protect our national security.”

Virtually all of the steel wire rod used to manufacture high tensile tire cord and bead wire that is consumed in U.S. tire manufacturing plants is sourced from foreign suppliers due to the stringent performance and quality requirements of tire manufacturing, as well as quality and supply limitations of domestic steel wire rod suppliers.

“A disruption in tire manufacturing in the U.S. would harm the U.S. economy, since consistent tire supply is critical to the nation’s shipping and commerce needs, and (it would) threaten national security, since the U.S. military relies on the tire industry to provide high performing and durable tires to aid in our national defense,” Norberg said.

President Donald Trump in April ordered the DOC to investigate whether steel imports were a threat to U.S. national security. While anti-dumping and countervailing investigations are common, The Washington Post reported that investigations studying the connection to national security are quite rare.

Norberg said the production process used by domestic steel mills is unable to manufacture tire cord-quality steel wire rod necessary to make tires for military and civilian applications by domestic tire producers. Tire manufacturers use this steel wire in a tire’s steel belts and in the bead.

“Tariffs or quotas on these products would significantly disrupt the production of tires in the United States, due to quality and supply limitations in domestically producing tire cord-quality steel wire rod to replace imported products,” Norberg said.

Read her complete testimony here.

Source: Link

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Donald Trump threatens Toyota over vehicle imports from Mexico

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Donald Trump’s tweet; Image Source: Link

Following recent attacks on Ford and GM for existing and planned imports of vehicles into the US from Mexico, US president-elect Donald Trump has now turned his attention to Toyota.

In a tweet posted on Thursday (January 5th) Trump said: “Toyota Motor said will build a new plant in Baja, Mexico, to build Corolla cars for US. NO WAY! Build plant in US or pay big border tax.”

Trump’s criticism of Toyota is somewhat misplaced, as it not building a new plant in Baja; it already has a plant there in Tijuana, which builds the Toyota Tacoma. It is, however, building a $1 billion plant in Guanajuato, which it plans to open in 2019 and will make the Corolla, with a production capacity of 200,000 units a year.

The OEM said previously that its decision to build in Guanajuato was part of a broader initiative at Toyota to drive supply chain, logistics and production efficiency between plants. It said the new plant would “leverage the existing robust supply base and transportation infrastructure in the region.”

Toyota defends position

Toyota was quick to respond to the criticism from Trump, stating that neither production volume nor employment in the US would decrease as a result of the new Guanajuato plant.

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Toyota Motor Corporation’s tweet in response to Trump’s tweet; Image Source: Link

It also suggested it was the smallest importer of vehicles from Mexico to the US in 2016. According to the figures from the Mexican automotive association, AMIA, for the period between January and November last year, Toyota moved just 124,000 vehicles north across the border, including to Canada (though Mazda and Kia moved fewer).

That figure is small compared with overall exports of passenger cars and trucks from Mexico to its Nafta neighbours to the north, which stand at 2.19m, or 86% of overall vehicle exports from Mexico (2.55m) over the 11-month period last year.

Toyota also produced a list of figures to emphasise its commitment to production in the US, pointing out that it had made direct investment of almost $22 billion and already had 10 manufacturing plants there. Recent expansions include that at the Georgetown plant in Kentucky, in which Toyota invested $360m and added 750 jobs. Toyota also pointed out that it exported more than 160,000 US-built vehicles to 40 countries and was helping to establish the US as a global export hub.

At the same time, however, the carmaker was careful to declare its willingness to work with the new political administration coming in this month.

“Toyota looks forward to collaborating with the Trump administration to serve in the best interests of consumers and the automotive industry,” said the company.

Whether Trump will act on his Twitter threats to impose heavy border taxes remains to be seen but, according to Thomas Cullen, analyst at consultancy Transport Intelligence, if vehicle manufacturers start to feel pressure to change their supply chain policies, global trade and logistics markets would come under substantial pressure.

“To take the Mexican example, much of production in Mexico relies on major components – including items such as engines and gearboxes – made in the US,” he said. “The reverse is also true, with Mexican plants acting as sources for parts for US production. Unraveling this supply chain structure would be possible but expensive and would have a major impact on rail and road freight across the US.”

News Source: Link