Speeches & Floor Statements

Floor Speech: Impose Tariffs on Imported Automobiles

Posted on July 18, 2018

I have come to the floor to discuss bipartisan legislation that the Senator from Alabama and I plan to introduce as soon as next week to encourage  the Trump Administration to reconsider the dangerous steps it is taking to impose tariffs on imported automobiles and automotive parts.

I use the word dangerous because nothing has done more during the last 40 years to raise family incomes in Tennessee than the arrival of the auto industry.

And nothing could do more to damage those family incomes than the proposed tariffs on imported automobiles and automotive parts, combined with the tariffs on imported steel and aluminum that the administration already has imposed.

Tennessee is likely to be hurt more than any other state by these tariffs.

Let me tell you a short story to explain these dramatic statements.

40 years ago I walked 1000 miles across Tennessee in my campaign for governor.  In Rutherford County, outside Nashville, I stayed with the Knight family.  Mrs. Knight told me that her twin boys were bright, but that she was sad because there were no jobs for them and that she was afraid she would never see her grandchildren.

40 years ago there were very few auto jobs in Tennessee. We were the third poorest state in family incomes.  Our low-paying textiles jobs were fleeing to other countries. Unemployment and inflation were high and prospects were bleak.

Then in 1980, Nissan from Japan arrived in Rutherford County. Then General Motors with Saturn to Spring Hill and then Volkswagen to Chattanooga, all with large manufacturing plants.  As the American automobile industry moved to the Southeastern United States, more than 900 auto parts suppliers located in 88 of our 95 counties.

Today 136,000 Tennesseans, or one-third of our manufacturing workforce, work in those auto plants.  These auto jobs have been the main driver of family incomes which now are at a little above the national average.  Our economy is booming. Unemployment is at a record low. 

Tennessee produces 6.7% of all the cars and trucks made in the United States. Tennessee exported more than $5.5 billion worth of automobiles and automotive parts in 2017. 

Tennessee has been the top state in automotive manufacturing strength for five of the last eight years according to Business Facilities.

To get back to my story, last year one of those bright twins from Rutherford County, Randy Knight, retired as general manager of the largest and most efficient Nissan plant in North America.  His brother works there too, and so does one of those grandchildren that the twins’ mother thought she might never get to see.

You can see why Tennesseans become very worried when anything threatens the auto industry that has transformed our state.

Here is why these proposed tariffs do just that.

Tariffs are taxes, pure and simple.   They make what we buy and sell more expensive.  The laws of economics usually mean that when you make what you buy and sell more expensive, you buy and sell less of it. 

If we sell fewer automobiles and automotive parts, there will be lower revenues, lower profits, fewer wage increases and fewer jobs.

Since almost every one of those more than 900 auto suppliers use steel and aluminum, lower revenues and smaller profits mean fewer wage increases and fewer jobs for 136,000 Tennesseans working in the automotive industry.

More expensive cars mean fewer people in the United States buy cars and fewer people overseas buy cars we make.

Fewer people buying cars and trucks means that 136,000 Tennesseans in America’s number auto state are going to have a lower standard of living and lower family incomes.

So why in the world would our government raise our taxes and destroy our jobs in this way?

The government’s answer is that tariffs protect jobs in the steel and aluminum industries.

We already know the cost.  President George W. Bush proposed steel tariffs in 2003, and dropped the idea after a year because it destroyed more jobs in other industries – including the automotive industry—than it saved in the steel producing industry.

I know something about the aluminum industry.  My father worked most of his life at ALCOA’s Tennessee smelting plant, which closed a few years ago because electricity was so much cheaper in other parts of the world.

Today, there are only 7 smelting plants in the United States.  Alcoa operates three and makes 46% of all the aluminum we produce. Alcoa opposes these tariffs because it also operates smelting plants in Canada and other countries that export aluminum to the United States. 

So the largest US producer of aluminum doesn’t want the tariffs.   The thousands of plants that use aluminum don’t want the tariff. Who is asking for these aluminum tariffs?

A second reason justifying tariffs is that other counties have been unfair to the United States. 

There may be examples of that, but when did it become a good idea to solve a problem by shooting yourself in both feet? It is hard to see how raising our taxes and destroying our jobs is a smart solution to unfair trade practices.

Then there is the question of whether tariffs help autoworkers or not.   Raising taxes and prices and selling fewer cars won’t help the American autoworker.

Will it cause foreign companies to build more cars in the United States?  That’s already happening.    

The foreign manufacturers are doing exactly what we asked them to do: they moved here, produce cars and trucks here, and export many to other countries. 

Today about half the cars being built in America are being built by the so-called foreign manufacturers.  Nissan’s plant in Rutherford County employs 8000 Tennesseans and is the largest and most efficient auto plant in North America.

I was with President Trump when he spoke in Michigan last year about all the autoworker jobs leaving the Midwest.  Well, 3.5 million of those jobs did leave the Midwest since 1994, but they didn’t go overseas, they moved to the Southeastern United States which gained 3.6 million jobs during the same period.  Those new plants are in Tennessee, Alabama, Georgia, Mississippi, South Carolina, Kentucky and Texas. Those plants moved primarily because the Southeast offered right to work laws and an environment that allowed companies to make quality cars at a lower cost and sell them competitively here and around the world.

So Mr. President, I agree with President Trump on many things:  taxes, judges, regulations, the economy, the Keystone Pipeline.  He’s helped create today’s booming economy and low unemployment. 

These tariffs take us in exactly the opposite direction.  These tariffs are dangerous. They are going to cost us jobs and lower our family incomes.  They will undo much of the good the president and Congress have done to restore the economy. 

I respectfully suggest that the president reconsider his trade policy, drop the tariffs as a tool for implementing his objectives, and find other more effective ways to persuade other countries to do for us what we do for them.