A former Secretary of Education under the first President Bush and a former Governor of Tennessee, Lamar Alexander, a Republican, has been serving as a Senator from Tennessee since 2003. He is a member of the Senate Appropriations Committee and in the July 26 subcommittee hearing with USTR Robert Lighthizer, he highlighted the high cost of the 232 tariffs - 25 percent on steel and 10 percent on aluminum - for Tennessee's companies.
To complete the quote above, the steel and aluminum content of a typical automobile is bad news for Tennessee...
"...because we've got 929 auto parts suppliers. They almost all use steel and aluminum. Three big car companies. That's 136,000 workers. That's a third of our manufacturing force. That's not good for us."
Senator Alexander didn't mention them by name, but our understanding is that, for Tennessee, the big three are GM in Spring Hill, Tennessee; Nissan in Smyrna, Tennessee; and VW in Chattanooga, Tennessee.
But it isn't just the car companies. The 232 tariffs affect numerous others, from a maker of gas grills to Bush Brothers. Here is our transcription of Senator Alexander's remarks in the first round of questioning at the July 26 hearing.
SENATOR ALEXANDER
Mr. Ambassador, until yesterday, the tariff taxes that the Administration had placed began to look like, "I've got a problem, so I'll shoot myself in one foot. I've got a problem, so I'll now show myself in the other foot."
... For those who think it's not hurting, The Wall Street Journal this morning said, "GM and Ford each said rising commodity prices-primarily steel-shaved about $300 million from their second quarter results." Most of it they blamed on the metals tariffs. Both companies buy almost all their steel from U.S. producers whose prices have increased in reaction to the tariff. Steel accounts for 53 percent of the material in a typical automobile and aluminum 11 percent. In Tennessee, that's pretty bad news because we've got 929 auto parts suppliers. They almost all use steel and aluminum. Three big car companies. That's 136,000 workers. That's a third of our manufacturing force. That's not good for us.
And it's not good for a lot of other people in Tennessee. Electrolux in Springfield. [Tennessee) cancelled a $250 million expansion because of steel prices going up, even though they buy all their steel in the U.S.
Our
big tire companies have to buy cord for the tires from overseas because it's not made in the United States. So they pay an extra price.
Bush Brothers cans a third of the beans in the United States. It's revenues are going down 8 percent, it thinks, because of the steel plated cans they have to buy. We have a company in
Dickson, Tennessee, that chose between China and the U.S., moved to Tennessee, then suddenly, on their
gas grills, steel prices are up 40 percent because of us, retaliatory tariffs raised it even more. So they are making a loss on every gas grill they export to Europe and Canada. They wish they had moved to China instead of the United States. Now, that's the bad news.
Now the good news is what the President said at the G7, what he said about a week ago, and what he said yesterday, is that we're headed toward a zero-tariff, zero-subsidy policy. That's what it should be, he said. I agree with that, and I'd like to ask you a couple of things about how we get there. Obviously, we're familiar with such a thing. I mean the North American Free Trade Agreement is essentially a zero-tariff agreement, with a few exceptions. It took us several years to get to that point, until 2008, but we got there.
Japan and Europe are negotiating the same kind of deal. So, as we take a step toward a zero-tariff agreement, which we would welcome in Tennessee, and I imagine in this country, would a reasonable Step 1 be, say, to make the tariffs the same between the United States and Europe on cars and trucks, which would be to lower to 10 percent the tariff on trucks, light trucks, and 2 ½ percent the tariff on cars.
And, as we begin to do this - my second question, then I'll let you take the rest of the time - how quickly then will we get rid of the steel and aluminum tariffs? Because, if we're moving toward a zero-tariff policy, obviously, we don't want to raise the price of steel 40 percent in the United States, which we have this year, according to the steel indices. Because you can't make a truck in Tennessee with steel up 40 percent and sell it competitively in the United States or export it to Europe.
So, would that first step seem reasonable to you, the one I described. And number 2, how quickly can we get rid of these steel and aluminum tariffs so we can be competitive in a zero-tariff environment?
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