Cautiously optimistic that a revised free-trade agreement for North America is headed for ratification, automakers are turning their focus to the threat of steel and aluminum tariffs.
Kevin Voelkel, senior vice president of Toyota Motor Manufacturing Texas, called upon nearly 200 diplomats and business leaders Wednesday to take a stand against tariffs that will not only drive up the cost of most vehicles, but also force automakers to develop new supply chains that won’t be easy to reverse.
“History shows that our industry, combining together, can effect major change,” Voelkel said. “So we’re taking a stand against tariffs and we’re going to do everything we can to make sure it doesn’t become a reality.”
At the International Business Forum, organized by the San Antonio Economic Development Foundation, representatives from foreign and local companies, along with diplomats from over 20 countries, including Argentina, the United Arab Emirates, Germany, and Thailand, gathered to network and learn more about business development opportunities in San Antonio. Now in its fifth year, the forum was previously hosted by the Free Trade Alliance which integrated with the foundation earlier this year.
Prior to introducing Voelkel at the luncheon, Texas Secretary of State Rolando Pablos reminded attendees that state and city leaders must work together to continue making Texas, which has the 10th-largest economy in the world, attractive to business. “We need to have good government that tells the world if you come here, we will work with you,” Pablos said.
During the daylong forum at the historic Menger Hotel, Voelkel delivered the keynote address, titled “Keeping Free Trade Alive: Why it Matters and How the Auto Industry’s Cross-Border Operations Depend on It.”
Voelkel spoke about the positive impact of the North American Free Trade Agreement (NAFTA), then addressed the issue of tariffs and said Toyota’s senior executives have been meeting with key White House leaders and trade representatives, and recently organized a rally in Washington, D.C.
“For us, tariffs are just another way of saying ‘taxes,’” Voelkel said. “And we know the impact taxes can have on an entire industry. We’re already seeing it in steel and aluminum tariffs that went into effect earlier this year.”
The Trump administration initially exempted Canada and Mexico from heavy tariffs on steel and aluminum imports but revoked that in June. Now that trade talks have resulted in a new trilateral trade deal, the U.S. Mexico Canada Agreement (USMCA), the White House is being pressured to restore the exemptions in order to get Canada and Mexico to lift the retaliatory tariffs those countries put on the U.S. over the summer.
Toyota exported its U.S.-built autos to 31 different countries in 2017. The Japanese automaker employs 7,200 people in Texas, including in San Antonio, where the Tundra and Tacoma are built. In its 60 years of operating in the U.S., Toyota has invested $25 billion. But it was NAFTA, signed 25 years ago, that largely fueled Toyota’s U.S. presence, with the automaker increasing its workforce here by 80 percent since then.
“Without the trilateral agreement between all three countries, the entire U.S. auto industry and the country’s economy and thousands of jobs will be at risk,” Voekel said. “That’s why competitors such as Ford, GM, Honda, BMW, and Toyota came together to work as a united team. I can tell you that doesn’t happen every day. But we’re not out of the woods yet.”
Voelkel said the risk of a U.S. withdrawal from the new trade deal remains, so automakers will continue to promote the positive economic impact the initial agreement provided even as the threat of tariffs still looms.
On Wednesday, Rep Henry Cuellar (D-Laredo) released his overview and analysis of the new trade agreement, and this statement: “I am encouraged to see the Administration taking active steps to bring confidence and certainty back to businesses in Texas. It is my hope that this new agreement is quickly signed into law so that we are able to continue to capitalize on the economic benefits NAFTA has facilitated for over two decades.”
Currently, no vehicle sold in the U.S. is manufactured exclusively with U.S. components. Voelkel said more than half of a Toyota Camry and more than 65 percent of a Tundra is made of content from the U.S., Canada, and Mexico.
“Our business philosophy and purchasing strategy has always been build where we sell and buy where we build,” he said. “Which is why more than 90 percent of the steel comes from right here in the United States.”
If the tariffs return, Voelkel said, “The bottom line is the price of every vehicle, even those built in the United States, will go up.” Consumers can expect to pay $2,800 more for a San Antonio-built Tundra, for example, and even more for a Sienna minivan.
“If you want to generate stable economic growth, make Texas and San Antonio a place that attracts new businesses, improves your standard of living, I hope you will join us in supporting free and fair trade,” Voelkel said.