Speeches & Floor Statements

Floor Speech: Tariffs on Imported Automobiles

Posted on June 7, 2018

 June 7, 2018 

Despite the fact that I agree with the president on taxes and judges and regulations and the list I just read, there's one area where I have been supremely ineffective in persuading him, and that is in the area of tariffs.

I care about that, especially because Tennessee has become, in many ways, the number one auto state. I helped to recruit the Nissan plant to Tennessee in 1980 as governor, at a time when we had literally no auto jobs and suddenly today one-third of our manufacturing jobs are auto jobs. These jobs are not only in three big auto plants like Nissan, General Motors and Volkswagen, they're in over 900 different auto suppliers in 88 of Tennessee's 95 counties.

Let me say that again. We have over 900 auto suppliers in 88 of 95 of Tennessee's counties. One-third of all of our manufacturing jobs and nothing has happened in the last 40 years to move us from the third poorest state in average family incomes up toward the middle and heading toward the top. It has been the greatest source of benefit for Tennessee families of anything that has happened. So you can see why I have become concerned when anything threatens that.

A 25% tariff on steel and a 10% tariff on aluminum threatens that because almost every one of those over 900 auto parts suppliers use aluminum and steel in making their parts for cars and trucks that will be sold in the United States and exported around the world. If your price goes up, what usually happens is your profits go down, your sales go down, and your wages don't go up as fast or jobs might disappear.

That's what happened when President George W. Bush did the same thing at the beginning of his term. I had just come to the United States Senate in 2003. President Bush tried to protect the steel companies, but what he did was he hurt everybody else more than the steel companies. There were more jobs lost in the companies that used steel than in the companies that produced steel. And already I'm hearing stories all across our state about the effect of tariffs, and I was hearing some of these stories even before the tariffs were imposed.

For example, not just auto parts. Electrolux, a big home appliance manufacturer planning a $250 million new plant to make home appliances in Springfield, Tennessee, buys 100% of its steel in the United States, but as soon as the steel tariffs were announced, it put that expansion on hold. Because when you raise the price of steel coming into the United States, then all the domestic suppliers raise their price and Electrolux said that even though it bought all of its steel from U.S. suppliers, it couldn't be competitive in the marketplace with tariffs on imported steel. That's one example.

Or here's a different kind of example. The Bush Brothers in east Tennessee, in Newport, a remarkable operation. They can one-third of all the beans in the United States. You’ve probably bought Bush Brothers beans.

Well, the cans have a certain kind of steel that's mostly imported because not enough of it is made in the United States. Bush Brothers estimates that the tariff on steel will reduce their revenues by 8.5%. They are a big company. That's one-third of all the beans in the United States. Now, these aren't served in country clubs. These are people who are in ordinary homes around the country buying cans of baked beans.

Their prices go up and the revenues go down, profits go down, employees go down, jobs go down, wages don't go up in Newport, Tennessee. And then we have two big tire companies in Tennessee. Bridgestone is one of them. Tires all have a strengthening kind of steel to make them stronger. None of that is produced in the United States. All of its imported.

So when you put a 25 percent tax on that strengthening steel coming in for the tires there, and in Hankook, I assume they do the same – they’re in Clarkesville, Tennessee – up goes the price for American consumers who buy tires and down go the profits for Bridgestone and Hankook and down go the revenues and down go the opportunity for increased wages and jobs. So think about the impact of a 25 percent increase on the materials you use to make parts and the companies that employ one-third of all the manufacturing jobs in Tennessee. We have a big, strong auto industry in the southeastern United States. We think a lot about the Midwest and we're proud of that.

But while the Midwest lost 3.5 million jobs in the last 20 years in the auto industry, the southeast gained 3.5 million jobs. We have a good, strong auto industry in Tennessee, we don't want to see it hurt. That is why, Mr. President, I have respectfully said to President Trump, even though – I say, I saw him in Nashville last week, I said, “Mr. President, as you know, I agree with you and am proud of what has happened with the best economy in the last 18 years, with the lower taxes, with the fewer regulations, all of those things. It’s the most significant accomplishments in at least 30 years by a conservative government. I would like to persuade you to change your mind on tariffs because our state is likely to be hurt more than any other state because in many ways we're the number one auto state.”

What I would suggest, respectfully, to the President is to shift focus from tariffs to reciprocity. In other words, say to every country, “Please do for us what we do for you”

We're going to insist on that. And then we've got various tools and weapons, maybe including tariffs in some cases, to enforce that. But the goal should be, “You do for us what we do for you.”

Mexico and Canada can do that. That shouldn't be a problem. The trade deficit is not the right indicator with Mexico and Canada. We produce nearly 24% of all the money in the world in the United States.

Mexico produces about 1%. So they spend 25% of their money buying stuff from us and we spend one-fifth of one percent buying stuff from them. So let's not focus on the trade deficit. Let's not start with tariffs. Let's say to other countries, “Do for us what we do for you,” and go country by country and enforce that.

That would be consistent with all the other accomplishments that have happened in the last 18 months. That would be consistent with the lower taxes and the fewer regulations and the other actions that have increased the best economy in the last 18 years. And it's my hope that I can become more persuasive on that. Article 1, Section 8, gives Congress the specific right to deal with tariffs, and I hope that we do.