A report issued by the Association of Equipment Manufacturers (AEM) warned that rising prices for steel, aluminum and other products needed to produce agricultural and construction equipment could hit consumers, workers and growth in gross domestic product.
According to the report, as the cost of producing such equipment rises to 6% to 7%, the equipment manufacturing industry may lose more than 20,000 jobs. The report also pointed out that the nation’s GDP may fall by 0.2% in 2019 and 2020. Overall, however, the report expects GDP to continue to grow in the next two years.
The report said that as consumers pay higher prices for these devices, their spending power will reduce $23 billion a year.
According to the latest data released on the San Antonio Manufacturing Association’s website, although the study assessed the nationwide impact, equipment and metal manufacturing accounted for nearly 25% of all manufacturing in the San Antonio area. The average salary of these equipment and metal manufacturers is $60,000, and the economic output in 2016 is close to $10 billion, of which $3 billion comes from exports, according to SAMA.
The report from AEM concluded that if foreign countries refuse to pay higher prices for manufactured goods such as machinery, tariffs may also hit the export market. The report warned that if these countries choose to retaliate by imposing import tariffs, the situation may get worse.
The report said that before the tariff war, U.S. fabricators and manufacturers have been difficult to compete with foreign products. Now, they face a problem: either pass the input cost to the imported product, lose the customer base, or eat the increase in the input cost, so that every product loses money. An economic analysis pointed out that increased costs and disruptions in the supply chain will slowly penetrate the overall economy, gradually increasing the price of finished products, and curbing employment in the next decade.
At the same time, AEM leaders said that these tariffs are hurting the interests of their member states, although they agree that China is not always an ideal trading partner.
“Although we agree with the Trump administration’s concerns about China’s unfair trade practices, including weak intellectual property protection, restrictions on foreign investment, and restrictions on competition, tariffs can only harm U.S. businesses, workers and families,” John Garrison, AEM board member and CEO of Terex Corp, said.