By Kristopher Porter

SEMA Launch Pad voting is now open. The premier automotive young entrepreneur competition has been narrowed down to 15 semi-finalists representing new, innovative products and services in the automotive specialty-equipment market. These next-gen leaders are looking for a big break to launch their businesses to the next level.

Your votes will help competitors to advance to the top 10 and give them an opportunity to earn a spot in the top five and compete at the 2019 SEMA Show, where finalists will pitch their products in front of a live audience to a panel of industry judges who will determine the ultimate winner.

Catch your favorite finalist at the live event taking place Monday, November 4, in the Westgate Theater at 11:30 a.m.

Get to know the semi-finalists; learn about their products and vote today!

Eric Amato	Alan Brentzel	Jason Denney	TJ Hammerle	Thomas Judge
Riley Koidahl	Andrew Lien	Reid Lunde	Christopher Steven Owens	Wesley Poole
Alexander Reid	Zachary Saylor	John Schurman	Sarah Smith	Justin Urban

By Kristopher Porter

SEMA Launch Pad voting is now open. The premier automotive young entrepreneur competition has been narrowed down to 15 semi-finalists representing new, innovative products and services in the automotive specialty-equipment market. These next-gen leaders are looking for a big break to launch their businesses to the next level.

Your votes will help competitors to advance to the top 10 and give them an opportunity to earn a spot in the top five and compete at the 2019 SEMA Show, where finalists will pitch their products in front of a live audience to a panel of industry judges who will determine the ultimate winner.

Catch your favorite finalist at the live event taking place Monday, November 4, in the Westgate Theater at 11:30 a.m.

Get to know the semi-finalists; learn about their products and vote today!

Eric Amato	Alan Brentzel	Jason Denney	TJ Hammerle	Thomas Judge
Riley Koidahl	Andrew Lien	Reid Lunde	Christopher Steven Owens	Wesley Poole
Alexander Reid	Zachary Saylor	John Schurman	Sarah Smith	Justin Urban

By Kristopher Porter

SEMA Launch Pad voting is now open. The premier automotive young entrepreneur competition has been narrowed down to 15 semi-finalists representing new, innovative products and services in the automotive specialty-equipment market. These next-gen leaders are looking for a big break to launch their businesses to the next level.

Your votes will help competitors to advance to the top 10 and give them an opportunity to earn a spot in the top five and compete at the 2019 SEMA Show, where finalists will pitch their products in front of a live audience to a panel of industry judges who will determine the ultimate winner.

Catch your favorite finalist at the live event taking place Monday, November 4, in the Westgate Theater at 11:30 a.m.

Get to know the semi-finalists; learn about their products and vote today!

Eric Amato	Alan Brentzel	Jason Denney	TJ Hammerle	Thomas Judge
Riley Koidahl	Andrew Lien	Reid Lunde	Christopher Steven Owens	Wesley Poole
Alexander Reid	Zachary Saylor	John Schurman	Sarah Smith	Justin Urban

By Kristopher Porter

SEMA Launch Pad voting is now open. The premier automotive young entrepreneur competition has been narrowed down to 15 semi-finalists representing new, innovative products and services in the automotive specialty-equipment market. These next-gen leaders are looking for a big break to launch their businesses to the next level.

Your votes will help competitors to advance to the top 10 and give them an opportunity to earn a spot in the top five and compete at the 2019 SEMA Show, where finalists will pitch their products in front of a live audience to a panel of industry judges who will determine the ultimate winner.

Catch your favorite finalist at the live event taking place Monday, November 4, in the Westgate Theater at 11:30 a.m.

Get to know the semi-finalists; learn about their products and vote today!

Eric Amato	Alan Brentzel	Jason Denney	TJ Hammerle	Thomas Judge
Riley Koidahl	Andrew Lien	Reid Lunde	Christopher Steven Owens	Wesley Poole
Alexander Reid	Zachary Saylor	John Schurman	Sarah Smith	Justin Urban

By Kristopher Porter

SEMA Launch Pad voting is now open. The premier automotive young entrepreneur competition has been narrowed down to 15 semi-finalists representing new, innovative products and services in the automotive specialty-equipment market. These next-gen leaders are looking for a big break to launch their businesses to the next level.

Your votes will help competitors to advance to the top 10 and give them an opportunity to earn a spot in the top five and compete at the 2019 SEMA Show, where finalists will pitch their products in front of a live audience to a panel of industry judges who will determine the ultimate winner.

Catch your favorite finalist at the live event taking place Monday, November 4, in the Westgate Theater at 11:30 a.m.

Get to know the semi-finalists; learn about their products and vote today!

Eric Amato	Alan Brentzel	Jason Denney	TJ Hammerle	Thomas Judge
Riley Koidahl	Andrew Lien	Reid Lunde	Christopher Steven Owens	Wesley Poole
Alexander Reid	Zachary Saylor	John Schurman	Sarah Smith	Justin Urban

By Kristopher Porter

SEMA Launch Pad voting is now open. The premier automotive young entrepreneur competition has been narrowed down to 15 semi-finalists representing new, innovative products and services in the automotive specialty-equipment market. These next-gen leaders are looking for a big break to launch their businesses to the next level.

Your votes will help competitors to advance to the top 10 and give them an opportunity to earn a spot in the top five and compete at the 2019 SEMA Show, where finalists will pitch their products in front of a live audience to a panel of industry judges who will determine the ultimate winner.

Catch your favorite finalist at the live event taking place Monday, November 4, in the Westgate Theater at 11:30 a.m.

Get to know the semi-finalists; learn about their products and vote today!

Eric Amato	Alan Brentzel	Jason Denney	TJ Hammerle	Thomas Judge
Riley Koidahl	Andrew Lien	Reid Lunde	Christopher Steven Owens	Wesley Poole
Alexander Reid	Zachary Saylor	John Schurman	Sarah Smith	Justin Urban

By Kristopher Porter

SEMA Launch Pad voting is now open. The premier automotive young entrepreneur competition has been narrowed down to 15 semi-finalists representing new, innovative products and services in the automotive specialty-equipment market. These next-gen leaders are looking for a big break to launch their businesses to the next level.

Your votes will help competitors to advance to the top 10 and give them an opportunity to earn a spot in the top five and compete at the 2019 SEMA Show, where finalists will pitch their products in front of a live audience to a panel of industry judges who will determine the ultimate winner.

Catch your favorite finalist at the live event taking place Monday, November 4, in the Westgate Theater at 11:30 a.m.

Get to know the semi-finalists; learn about their products and vote today!

Eric Amato	Alan Brentzel	Jason Denney	TJ Hammerle	Thomas Judge
Riley Koidahl	Andrew Lien	Reid Lunde	Christopher Steven Owens	Wesley Poole
Alexander Reid	Zachary Saylor	John Schurman	Sarah Smith	Justin Urban

Compiled by SEMA Editors

Heather Dorethy

Borowski Race Engines Hires Heather Dorethy as Sales and Marketing Representative

Borowski Race Engines Inc. (BRE) has announced that Heather Dorethy has joined its team as a sales and marketing representative. She is an active drag racer raised in a family of drag racers. Her professional credits include sales and marketing roles with automotive aftermarket firms, most recently with Precision Turbo & Engine. She has also been a brand ambassador for such major sponsors of NHRA events as Mellow Yellow and MOPAR. Dorethy has been an active participant and panelist at numerous trade shows including SEMA, PRI and Race & Performance Expo. Her memberships include SEMA’s Businesswomen’s Network, CARCHIX Nation, International Women’s Motorsport Association, Chicagoland Mustang Club and FastHer.

Chicago Pneumatic Welcomes New Product Marketing Manager for Industrial Tools

Chicago Pneumatic has announced the addition of Paul Olsowske as product marketing manager at the company’s U.S. headquarters in Rock Hill, South Carolina. Olsowske will oversee the launch and promotion of tools in Chicago Pneumatic’s Industrial Tools segment in the United States and North American territory. Olsowske has an extensive background in industrial pumps, which he notes shares a segment of the same customer base as Chicago Pneumatic’s industrial tools.  

(L–R): Jack Bordeau and Scott Shea of CRP Industries at 2019 Best Reman Business Innovation Award presentation with Adam Hill of ReMaTec.

CRP Industries Earns Best Reman Business Innovation Award for AAE Steering Systems brand at ReMaTec 2019

CRP Industries has earned the Best Reman Business Innovation Award from ReMaTec, a platform for remanufacturing and remanufacturing news. The award, which was given during the Remanufacturer of the Year Awards in June 2019, recognizes CRP Industries for its AAE Steering Systems Components brand, which features remanufactured electric power steering (EPS) systems components. The ceremony took place during ReMaTec 2019, held in Amsterdam, The Netherlands. The Best Reman Business Innovation award, one of three awards presented at the opening ceremonies, was judged by a panel of remanufacturing industry experts. CRP Industries was praised for its introduction of lean principles and semi-automation to its supply-chain management at its North Carolina manufacturing facility.

TI Automotive Achieves SEMA Data Co-Op Platinum Status

TI Automotive has achieved platinum status with the SEMA Data Co-Op (SDC)—“data central” for hundreds of specialty-parts brands, representing millions of part numbers and tens of millions of vehicle applications. To achieve platinum status, manufacturers must meet and exceed a range of data requirements and standards in every applicable field in the SDC scorecard. Platinum data provides nearly 60 PIES (product) fields and ACES (application and fitment) data, making it a complete set of information to build detailed product listings with descriptions, digital assets including images and videos, tariff codes and sales metrics. This data makes it easy for sellers to create informative product listings. Since its inception in 2012, the SDC has helped thousands of businesses share and communicate product detail quickly and efficiently. The industry-owned-and-operated data repository gives members access to tools that manage a product's weight, size and application, as well as its price, shipping and UPC codes. For more information, visit www.semadatacoop.org.                                                                      

Vintage Planet LLC is now an official Superformance and Shelby Legendary Cars dealer.

Vintage Planet of Cookeville Becomes Official Superformance and Shelby Legendary Cars Dealer

Vintage Planet LLC is now an official Superformance and Shelby Legendary Cars dealer. Vintage Planet sells the full product lines, including the Cobra Mark III, FIA Cobra, Slabside Cobra, GT40, Cobra Daytona Coupe and GM licensed Corvette Grand Sport. All Shelby Legendary Cars and GT40s have a Shelby CSX serial number and are FIA vintage race eligible. The full line of Cobras and Daytona Coupes are available with handcrafted aluminum bodies. Vintage Planet’s showroom and service center are located at 3073 Poplar Grove Road, just off I-40 in Cookeville, Tennessee.

Auctus Advises MOVE Bumpers Through Buyout Transaction

Auctus Capital Partners has announced its role as exclusive advisor to MOVE Inc., which has been acquired by private investment firm BASE. The transaction was led by Auctus and its Managing Director William Allen. Since the company’s inception in 2013, MOVE has experienced exponential growth, developing an international customer base and a fabricator network, and has been named on the Inc. 5,000 list of the Top 500 fastest growing companies in America in 2017 and 2018. Terms of the acquisition were not disclosed.

Cary Redman

Edelbrock Announces Cary Redman as New Vice President of Brand Sales

Edelbrock has announced that Cary Redman has been appointed vice president of Edelbrock brand sales. Redman will focus on guiding Edelbrock’s field sales team while expanding customer relationships. Redman will also manage the customer and tech service departments. Prior to Redman’s promotion, he served as Edelbrock’s national sales manager. Additionally, as part of Edelbrock’s evolution and need for channel focus, Steve Whipple will become vice president of Edelbrock foundry and private-label sales. He has served Edelbrock for 20 years.

Zan Martin

Zan Starnes Martin Elected to Serve on Martin Methodist College Board of Trustees

Zan Martin, president and CEO of Martin & Company Advertising and Martin Methodist alumna, was elected in July to join the governing board of trustees for Martin Methodist College (MMC). The four-year college located in Pulaski, Tennessee, is related to and partially supported by the Tennessee Conference of the United Methodist Church and is accredited by the Southern Association of Colleges and Schools to provide both associate and baccalaureate degrees in addition to a masters of business administration degree. The college is named after Thomas Martin (not a relation), who served as president of the Nashville and Decatur Railroad and was a close friend of President James K. Polk. Martin attended MMC from 1977–1979, where she received her associates degree. As a member of the alumna association, she has been an avid supporter of the school’s activities and fundraising efforts and is currently assisting in marketing and PR efforts for the school’s sesquicentennial milestone set to take place in 2020. Martin is the founder and owner of Martin & Company, a full-service advertising agency specializing in the automotive aftermarket, and a former SEMA board member.

Capstone Financial Group Announces Three Simultaneous Transactions

Capstone Financial Group and its investment banking subsidiary Mobility Securities LLC recently completed a transaction in which Adell Group Inc.—a Texas-based automotive OEM supplier and portfolio company of Kinderhook Industries LLC—simultaneously acquired three vertically integrated manufacturers and distributors of trim products sold to auto manufacturers through the Original Equipment Service channel. The sellers were three separate entities: Powerflow Inc., of Buffalo, New York; Powerflow Products Ltd., of Toronto; and Solutions Plastik Inc., of Magog, Quebec. Capstone provided independent, in-depth financial analysis and accounting functions for the three entities in preparation for the deal.

Hennessey Performance Engineering recently broke ground on a new 15,000-sq.-ft. state-of-the-art factory.

Hennessey Expands Texas Factory to Keep Up With Demand

Hennessey Performance Engineering (HPE) recently broke ground on a new 15,000-sq.-ft. state-of-the-art factory to keep up with demand and for Venom F5 production. Additionally, the company’s Instagram account just surpassed 1 million followers. Increasing demand for powerful trucks and SUVs is also a driving factor in the growth of HPE. Last year, Hennessey built and delivered more than 500 vehicles to clients around the globe and more than 50 percent of these vehicles were trucks and sport/utility vehicles. The new space will allow the company to add a second chassis dyno as well as additional space for parts and production. The new facility will also have a dedicated work area for Venom F5 production. Hennessey expects to have the new expansion completed and functional in Q1 2020.

Have some company news you would like to share? Let us know and the news may appear in an upcoming issue of SEMA eNews. Send your items for consideration to editors@sema.org.

SEMA News—August 2019

LEGISLATIVE AND TECHNICAL AFFAIRS

By Stuart Gosswein

SEMA Welcomes Trade Negotiations, Opposes Tariffs

Legislation is being considered that would require congressional approval of tariffs imposed or, alternatively, provide Congress the option to overturn any imposed tariffs.

The global trading system has the potential to foster economic growth and support peaceful relations between nations. If it breaks down, it can lead to confrontation as countries seek to shield their domestic industries. Tariffs can be a powerful tool for leveling the playing field or, conversely, lead to trade wars and protectionism. The Trump Administration is using tariffs to strengthen its hand in trade negotiations with its trading partners. Is the strategy working?

First, a little background.

Following World War II, the United States led the effort to encourage international trade within a rules-based, open trading system. The 1948 General Agreement on Tariffs and Trade led to the present-day World Trade Organization, which produced widespread prosperity, lower prices, greater consumer choice and an easing of international tensions.

Nevertheless, globalization created significant problems. For example, it has been difficult for U.S.-based manufacturers to compete against lower wages found in other countries. China, in particular, has posed significant problems for U.S. manufacturers. China joined the World Trade Organization in 2001, and the hope was that it would open its markets and create opportunities for U.S. manufacturers as part of the world trading community. That hope, however, has been undermined by China’s use of currency manipulation, intellectual-property theft, and other unfair trade practices. Which brings us back to the current U.S. trade negotiations.

The Trump Administration began with a bold agenda: demand fair trade and renegotiate trade pacts. SEMA applauded the goal, especially with respect to securing structural reforms in the U.S./China trade relationship and protecting intellectual property rights.

Beyond unfair trade, the Trump Administration has pursued perceived threats to U.S. national security. The first concern was U.S. domestic production of steel and aluminum. By early 2018, U.S. steel mills were operating at 73% of capacity, and more than half of U.S. aluminum capacity lay dormant, with imports accounting for 90% of U.S. aluminum consumption. Since the tariffs were imposed in June 2018, U.S. domestic steel production is now above the 80% capacity goal, but aluminum production still lags.

Imposing 25% tariffs on steel and 10% on aluminum helped domestic metal producers, but that sector’s gains have taken place at an enormous cost to its downstream customers, including many SEMA members. Tariff side effects include stockpiling, hoarding and artificial price spikes.

Although the steel and aluminum tariffs were recently removed from Canada and Mexico, they were imposed globally rather than being targeted at the primary culprit: over-production in China and a few other countries. The tariffs were also imposed on raw materials only (rolled steel, bars, pipe, etc.), ironically making it more difficult for U.S. manufacturers to compete with imported finished products made with steel or aluminum.

The Trump Administration also questioned whether imported automobiles and auto parts pose a threat to America’s national security. The administration is concerned that a contraction of the “American-owned auto industry” will impede the country’s ability to develop technologically advanced products essential to our ability to maintain technological superiority to meet defense requirements. Examples include advances in engine and powertrain technology, electrification, lighter-weight materials, connectivity and autonomous driving.

President Trump has discussed imposing 20%–25% tariffs on all auto imports, a category that could include new cars, classic cars, OEM parts and specialty auto parts. A decision on whether to move forward with tariffs has been delayed until mid-November so that the United States can negotiate new trade treaties with the European Union, Japan and Korea.

Meanwhile, the threat of tariffs continues to loom large at a time when companies are facing higher costs of production, lower sales and profit margins, and retaliatory actions by other countries. SEMA is part of the Driving American Jobs Coalition, which is comprised of the leading automakers, parts suppliers, auto dealers, parts distributors, retailers and vehicle service providers and stands united in opposition to auto tariffs that would have damaging effects on consumers and the nation’s economy.

The negotiations with China are especially challenging. China has emerged as a major global economic player, with international supply chains becoming deeply rooted there. Rather than working collaboratively with the other Pacific Rim allies who have a shared interest in confronting China on trade violations, the United States has taken a unilateral approach.

As the U.S.-China negotiations commenced, the Trump Administration imposed tariffs as a bargaining tool. Many months later, $250 billion of Chinese goods are now subject to 25% tariffs, with threats to impose the same on all Chinese imports. China imposed retaliatory tariffs on about $60 billion worth of U.S. goods. Most of the levies are on agriculture products, but some motor-vehicle parts are also impacted.

Tariffs are a blunt instrument for dealing with trade disputes, and they often have unwelcome consequences, including retaliation by other countries. Tariffs are a tax paid by U.S. companies and consumers. They create downstream price spikes, marketplace confusion and supply-chain disruption. SEMA has urged administration officials to use other tools to enforce against unfair trade practices rather than using tariffs as a bargaining chip.

As the tariffs have escalated, lawmakers have begun discussing whether they should revisit presidential authority to impose tariffs without congressional input—a power ceded to the executive branch in recent decades. Legislation is being considered that would require congressional approval of tariffs imposed or, alternatively, provide Congress the option to overturn. The legislation would also clarify when tariffs could be imposed based on national security concerns, such as the steel/aluminum tariffs and the threatened imported automobile and auto parts tariffs.

SEMA looks forward to successful trade negotiations to resolve outstanding disputes. It also looks forward to the removal of tariffs that have been recently imposed or threatened.

Tariffs

Steel/Aluminum: The U.S. government has imposed global tariffs on steel (25%) and aluminum (10%) under authority of Section 232 of U.S. trade law (national security). The tariffs are intended to protect domestic metal producers from over-production in China and other countries. Most of the tariffs began on June 1, 2018. Argentina, Australia, Brazil and South Korea were exempted based on trade agreements. Mexico and Canada were exempted on May 20, 2019. The tariffs apply to processed raw materials (steel/aluminum plate, sheets, bars, etc.) but not finished products (wheels, exhausts, etc.). U.S.-based companies are eligible for a one-year tariff exclusion if they can demonstrate that the foreign-produced material is not made in the United States in reasonably available quantity or satisfactory quality. More than 50,000 company exclusion requests have been received to date. Chinese Products: The U.S. imposed 25% tariffs on $50 billion worth of Chinese imports and 10% tariffs on another $200 billion worth of goods, which rose to 25% on May 10, 2019. Tariffs on all other products imported from China may follow if trade talks are unsuccessful. The tariffs are an attempt to lower the U.S./China trade deficit, deter cyber theft of intellectual property by the Chinese government and companies, and eliminate forced technology transfers among other disputes. The U.S. Trade Representative imposed the tariffs under Section 301 of U.S. trade law (unfair trade). They have been imposed in three separate actions. List 1 Tariffs: 25% on $34 billion in goods imposed on July 6, 2018. There are 818 Harmonized Tariff Code listings, including miscellaneous metal and rubber parts for auto equipment, machinery, tools, measurement and medical devices. List 2 Tariffs: 25% on $16 billion in goods imposed on August 23, 2018. There are 279 Harmonized Tariff Code listings, including many types of plastics. List 3 Tariffs: 10% on $200 billion in goods imposed on September 24, 2018, and increased to 25% on May 10, 2019. There are 5,745 Harmonized Tariff Code listings, including many auto parts ranging from engines and metal fasteners to tires, steering wheel components, rubber gaskets, transmission belts, brake pads, windshields and suspension springs. Imported Automobiles and Auto Parts: On May 23, 2018, President Trump directed the U.S. Department of Commerce (DOC) to investigate whether imported autos and auto parts pose a threat to America’s national security based on Section 232 of U.S. trade law. The investigation applies to all types of cars and parts, including new cars, classic cars, and original and specialty auto parts. The DOC findings were sent to the President on February 17, 2019, but not made public. On May 18, President Trump delayed a decision on whether to impose tariffs until mid-November. The President has signaled a desire to impose 20%–25% tariffs as leverage in trade talks with the European Union, Japan and Korea. SEMA and seven other trade associations representing the broad scope of the auto industry—from automakers and dealers to parts manufacturers, distributors, retailers and service providers—formed the Driving American Jobs Coalition. The coalition is united in opposing the referenced tariffs as being counterproductive and threatening American companies, workers and consumers. The message to the president and lawmakers has been to oppose tariffs and pursue trade infringements in a fashion that does not inflict unintended economic harm. United States-Mexico-Canada Agreement: The United States-Mexico-Canada Agreement (USMCA) has been signed by the three nations, but the legislatures of each country must approve it before it replaces the North American Free Trade Agreement. The USMCA would require that vehicles have 75% North American content, compared with 62.5% currently. At least 40%–45% of the vehicle content must be made by workers earning at least $16 an hour. Mexico and Canada would not be subject to national-security tariffs if such were imposed on imported automobiles and auto parts. In May, the three countries reached agreement allowing for the removal of the steel and aluminum tariffs. There is no timetable for submitting the treaty to the U.S. Congress, but passage will become more challenging the closer it gets to the 2020 elections.

SEMA News—August 2019

LEGISLATIVE AND TECHNICAL AFFAIRS

By Stuart Gosswein

SEMA Welcomes Trade Negotiations, Opposes Tariffs

Legislation is being considered that would require congressional approval of tariffs imposed or, alternatively, provide Congress the option to overturn any imposed tariffs.

The global trading system has the potential to foster economic growth and support peaceful relations between nations. If it breaks down, it can lead to confrontation as countries seek to shield their domestic industries. Tariffs can be a powerful tool for leveling the playing field or, conversely, lead to trade wars and protectionism. The Trump Administration is using tariffs to strengthen its hand in trade negotiations with its trading partners. Is the strategy working?

First, a little background.

Following World War II, the United States led the effort to encourage international trade within a rules-based, open trading system. The 1948 General Agreement on Tariffs and Trade led to the present-day World Trade Organization, which produced widespread prosperity, lower prices, greater consumer choice and an easing of international tensions.

Nevertheless, globalization created significant problems. For example, it has been difficult for U.S.-based manufacturers to compete against lower wages found in other countries. China, in particular, has posed significant problems for U.S. manufacturers. China joined the World Trade Organization in 2001, and the hope was that it would open its markets and create opportunities for U.S. manufacturers as part of the world trading community. That hope, however, has been undermined by China’s use of currency manipulation, intellectual-property theft, and other unfair trade practices. Which brings us back to the current U.S. trade negotiations.

The Trump Administration began with a bold agenda: demand fair trade and renegotiate trade pacts. SEMA applauded the goal, especially with respect to securing structural reforms in the U.S./China trade relationship and protecting intellectual property rights.

Beyond unfair trade, the Trump Administration has pursued perceived threats to U.S. national security. The first concern was U.S. domestic production of steel and aluminum. By early 2018, U.S. steel mills were operating at 73% of capacity, and more than half of U.S. aluminum capacity lay dormant, with imports accounting for 90% of U.S. aluminum consumption. Since the tariffs were imposed in June 2018, U.S. domestic steel production is now above the 80% capacity goal, but aluminum production still lags.

Imposing 25% tariffs on steel and 10% on aluminum helped domestic metal producers, but that sector’s gains have taken place at an enormous cost to its downstream customers, including many SEMA members. Tariff side effects include stockpiling, hoarding and artificial price spikes.

Although the steel and aluminum tariffs were recently removed from Canada and Mexico, they were imposed globally rather than being targeted at the primary culprit: over-production in China and a few other countries. The tariffs were also imposed on raw materials only (rolled steel, bars, pipe, etc.), ironically making it more difficult for U.S. manufacturers to compete with imported finished products made with steel or aluminum.

The Trump Administration also questioned whether imported automobiles and auto parts pose a threat to America’s national security. The administration is concerned that a contraction of the “American-owned auto industry” will impede the country’s ability to develop technologically advanced products essential to our ability to maintain technological superiority to meet defense requirements. Examples include advances in engine and powertrain technology, electrification, lighter-weight materials, connectivity and autonomous driving.

President Trump has discussed imposing 20%–25% tariffs on all auto imports, a category that could include new cars, classic cars, OEM parts and specialty auto parts. A decision on whether to move forward with tariffs has been delayed until mid-November so that the United States can negotiate new trade treaties with the European Union, Japan and Korea.

Meanwhile, the threat of tariffs continues to loom large at a time when companies are facing higher costs of production, lower sales and profit margins, and retaliatory actions by other countries. SEMA is part of the Driving American Jobs Coalition, which is comprised of the leading automakers, parts suppliers, auto dealers, parts distributors, retailers and vehicle service providers and stands united in opposition to auto tariffs that would have damaging effects on consumers and the nation’s economy.

The negotiations with China are especially challenging. China has emerged as a major global economic player, with international supply chains becoming deeply rooted there. Rather than working collaboratively with the other Pacific Rim allies who have a shared interest in confronting China on trade violations, the United States has taken a unilateral approach.

As the U.S.-China negotiations commenced, the Trump Administration imposed tariffs as a bargaining tool. Many months later, $250 billion of Chinese goods are now subject to 25% tariffs, with threats to impose the same on all Chinese imports. China imposed retaliatory tariffs on about $60 billion worth of U.S. goods. Most of the levies are on agriculture products, but some motor-vehicle parts are also impacted.

Tariffs are a blunt instrument for dealing with trade disputes, and they often have unwelcome consequences, including retaliation by other countries. Tariffs are a tax paid by U.S. companies and consumers. They create downstream price spikes, marketplace confusion and supply-chain disruption. SEMA has urged administration officials to use other tools to enforce against unfair trade practices rather than using tariffs as a bargaining chip.

As the tariffs have escalated, lawmakers have begun discussing whether they should revisit presidential authority to impose tariffs without congressional input—a power ceded to the executive branch in recent decades. Legislation is being considered that would require congressional approval of tariffs imposed or, alternatively, provide Congress the option to overturn. The legislation would also clarify when tariffs could be imposed based on national security concerns, such as the steel/aluminum tariffs and the threatened imported automobile and auto parts tariffs.

SEMA looks forward to successful trade negotiations to resolve outstanding disputes. It also looks forward to the removal of tariffs that have been recently imposed or threatened.

Tariffs

Steel/Aluminum: The U.S. government has imposed global tariffs on steel (25%) and aluminum (10%) under authority of Section 232 of U.S. trade law (national security). The tariffs are intended to protect domestic metal producers from over-production in China and other countries. Most of the tariffs began on June 1, 2018. Argentina, Australia, Brazil and South Korea were exempted based on trade agreements. Mexico and Canada were exempted on May 20, 2019. The tariffs apply to processed raw materials (steel/aluminum plate, sheets, bars, etc.) but not finished products (wheels, exhausts, etc.). U.S.-based companies are eligible for a one-year tariff exclusion if they can demonstrate that the foreign-produced material is not made in the United States in reasonably available quantity or satisfactory quality. More than 50,000 company exclusion requests have been received to date. Chinese Products: The U.S. imposed 25% tariffs on $50 billion worth of Chinese imports and 10% tariffs on another $200 billion worth of goods, which rose to 25% on May 10, 2019. Tariffs on all other products imported from China may follow if trade talks are unsuccessful. The tariffs are an attempt to lower the U.S./China trade deficit, deter cyber theft of intellectual property by the Chinese government and companies, and eliminate forced technology transfers among other disputes. The U.S. Trade Representative imposed the tariffs under Section 301 of U.S. trade law (unfair trade). They have been imposed in three separate actions. List 1 Tariffs: 25% on $34 billion in goods imposed on July 6, 2018. There are 818 Harmonized Tariff Code listings, including miscellaneous metal and rubber parts for auto equipment, machinery, tools, measurement and medical devices. List 2 Tariffs: 25% on $16 billion in goods imposed on August 23, 2018. There are 279 Harmonized Tariff Code listings, including many types of plastics. List 3 Tariffs: 10% on $200 billion in goods imposed on September 24, 2018, and increased to 25% on May 10, 2019. There are 5,745 Harmonized Tariff Code listings, including many auto parts ranging from engines and metal fasteners to tires, steering wheel components, rubber gaskets, transmission belts, brake pads, windshields and suspension springs. Imported Automobiles and Auto Parts: On May 23, 2018, President Trump directed the U.S. Department of Commerce (DOC) to investigate whether imported autos and auto parts pose a threat to America’s national security based on Section 232 of U.S. trade law. The investigation applies to all types of cars and parts, including new cars, classic cars, and original and specialty auto parts. The DOC findings were sent to the President on February 17, 2019, but not made public. On May 18, President Trump delayed a decision on whether to impose tariffs until mid-November. The President has signaled a desire to impose 20%–25% tariffs as leverage in trade talks with the European Union, Japan and Korea. SEMA and seven other trade associations representing the broad scope of the auto industry—from automakers and dealers to parts manufacturers, distributors, retailers and service providers—formed the Driving American Jobs Coalition. The coalition is united in opposing the referenced tariffs as being counterproductive and threatening American companies, workers and consumers. The message to the president and lawmakers has been to oppose tariffs and pursue trade infringements in a fashion that does not inflict unintended economic harm. United States-Mexico-Canada Agreement: The United States-Mexico-Canada Agreement (USMCA) has been signed by the three nations, but the legislatures of each country must approve it before it replaces the North American Free Trade Agreement. The USMCA would require that vehicles have 75% North American content, compared with 62.5% currently. At least 40%–45% of the vehicle content must be made by workers earning at least $16 an hour. Mexico and Canada would not be subject to national-security tariffs if such were imposed on imported automobiles and auto parts. In May, the three countries reached agreement allowing for the removal of the steel and aluminum tariffs. There is no timetable for submitting the treaty to the U.S. Congress, but passage will become more challenging the closer it gets to the 2020 elections.