Suppliers to major automotive makers in the United States are being hit hard by President Trump’s tariffs on raw goods, particularly tariffs on steel and aluminum, according to one local executive. Jeffrey Clark, president and CEO of Waukesha Metal Products, said these tariffs make competing on a global stage considerably difficult. Clark is also partner at
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Jeffrey Clark[/caption]
The company has competed against global suppliers “forever,” Clark said, and these tariffs make that competition even more difficult.
“The last time I looked at steel prices in China versus the U.S., I think it was about $400 a ton less in China. I paid $400 more here, so a 25% tariff doesn’t necessarily get you any further ahead,” said Clark.
He believes placing tariffs solely on raw materials is a flaw in the government’s strategy.
Waukesha Metal Products makes components for automobiles. Those parts are sent to customers who then assemble the vehicles at other facilities.
“If there’s no tariffs on those downstream products, especially on mine, (customers) may be able to purchase products from China, which has a $600 difference in steel price per ton, so their input price is much lower and (customers) can buy products cheaper,” said Clark.
Right now, Waukesha Metal Products is passing along any tariff costs directly to customers. The tariff is added at the time of shipment.
While the company is able to source most of its metal domestically, there are certain components, like bolts and magnets, that can’t be purchased in the United States anymore, Clark explained.
He’s been keeping a close eye on the domestic steel market, and said steel mills have some capacity to build up production. Clark is more concerned with the possibility of inflation leading to softening consumer demand.
“When tariffs were announced, domestic steel pricing went up. They raised prices even though they weren’t being tariffed. That’s inflation,” said Clark. “That’s part of the concern with tariffs. Does it cause other economic downstream issues, like slower buying?”
Clark has another long-term concern: the long-standing cooperative agreement between the United States, Canada and Mexico. He doesn’t want to see the relationship between these countries damaged due to President Trump's tariff strategy.
"A lot of our industry has spread amongst North America, and that's how we were countering the Asia dynamics of how they were manufacturing and had a robust supply chain," said Clark.
Suppliers within the automotive industry had already seen a slowdown in demand beginning in the third quarter of last year, Clark added. New projects and launches were being delayed, and some major automakers (like Stellantis and VW) have since paused production at some plants.
“We see projects shifting and flowing,” said Clark. “No one is buying. People are dropping demand out of their schedules as protection.”