Tariffs are raising costs for equipment manufacturers and costing the industry jobs, officials with the Association of Equipment Manufacturers said in a response to a new report on the tariffs impacts.
The IHS Markit report, commissioned by the AEM, concluded that tariffs on about $265 billion of imports would hurt the U.S. economy to the tune of $290 billion in lost gross domestic product over 10 years.
“This report shows that tariffs continue to take a toll on U.S. equipment manufacturers, who will pay significantly more to manufacture equipment in the United States in the coming years,” AEM president Dennis Slater said a news release announcing the IHS Markit report in mid March. “Tariffs on steel, aluminum, and Chinese imports, as well as the potential for additional tariffs, are driving up the cost of production, delaying capital investments, and impeding job creation for our more than 1,000 member companies.”
The report, titled “The Economic and Industry Impact of Protectionism Tariffs on the Off-highway Equipment Sector,” estimates the impact of the Trump administration’s Section 232 and Section 301 tariffs.
Among the report’s findings are the following:
• the tariffs will suppress domestic job gains by 260,000 over 10 years;
• consumers will pay higher prices and reduce their real spending by $23 billion per year until the end of the forecast horizon in 2027.
• tariffs will increase costs of producing U.S. agriculture and construction equipment by six percent and increase the costs of producing U.S. mining equipment, which has a higher steel content, by seven percent; and
• diminished output of all off-highway equipment is projected to cause a loss of 20,700 jobs during the forecast period.
“While we agree with the Trump administration’s concerns regarding China’s unfair trade practices, including weak intellectual property protections, restrictions on foreign investment, and policies that limit competition, tariffs only hurt America’s businesses, workers, and families,” said John Garrison, chairman of the AEM board, and president and CEO of Terex Corporation. “We urge the Trump administration to negotiate solutions to these long-standing issues with China, de-escalate economic tensions, and remove broad unilateral tariffs.”