Scott County

As talks of tariffs, retaliations escalate, stakes high for TMMK, Toyota Tsusho

New cars were transported at Toyota Motor Manufacturing Kentucky in Georgetown in 2016.
New cars were transported at Toyota Motor Manufacturing Kentucky in Georgetown in 2016.

Threats of U.S. tariffs and international retaliation had previously targeted Kentucky bourbon, but this week stakes were raised considerably for Scott County, as well as the state at large, as tariffs on imported steel and aluminum were announced by the Trump administration.

Just days earlier Trump used national security as grounds to open an investigation into automobile imports, throwing the industry in turmoil as auto tariffs are threatened.

Any U.S. industry that uses steel or aluminum will likely be negatively impacted by President Trump’s decision to impose tariffs on imported steel and aluminum — and that includes Toyota Motor Manufacturing Kentucky and Toyota Tsusho America.

TMMK officials declined to address the issues specifically, but referred to statements by the Alliance of Automobile Manufacturers, a trade group of automobile manufacturers representing 77 percent of all car and light truck sales in the U.S. Besides Toyota, other members of the Alliance include Ford, General Motors, Honda, Aston Martin, BMW, Ferrari, Hyundai, Jaguar, Kia, Maserati, Mazda, Mercedes-Benz, Mitsubishi, Nissan, Porsche, Subaru, Volkswagen and Volvo.

“The Alliance is disappointed by today’s decision and urges the Administration to reconsider the decision,” the statement reads. “We recognize the desire to address legitimate concerns about steel and aluminum over capacity, but imposing these tariffs on imports from the European Union, Canada and Mexico does not advance that objective.

“Automakers already source the majority of their steel and aluminum from U.S. producers and imposing these tariffs will result in an increase of domestically produced steel — threatening the industry’s global competitiveness and raising vehicle costs for our customers — and invite retaliation. Keeping vehicles affordable means higher sales, more auto sector jobs and faster fleet turnover — translating into fuel economy gains and safety improvements.”

On May 24, following Trump’s announcement to investigate automobile imports, the Alliance issued this statement,” This investigation under Section 232 is a process that has rarely been used and traditionally has not focused on finished products. We urge the Administration to support policies that remove barriers to free trade and we will continue to work with them and provide input to achieve that goal.”

Matt Nunn, general manager for Toyota Tsusho America’s plant in Georgetown said the tariffs are already negatively influencing its business.

“While over 90 percent of the steel and aluminum we sell our customers comes from domestic suppliers, the steel and aluminum tariffs have already impacted our business in ways beyond the added cost of the tariffs themselves,” Nunn said. “For example, our cargo insurance costs have increased and we’ve spent hundreds of hours communicating changes to our staff, customers and suppliers. The removal of the tariff exemptions for Mexico, Canada, and the EU are certain to have the same impact.

“We also export to those countries and their announcements of retaliatory tariffs may ultimately affect us more than the aluminum and steel tariffs have. We’ll know more about these retaliatory tariffs and their impact in the coming days.”

The U.S. began imposing a 25 percent tariff on steel and 10 percent tariff on aluminum for Canada, Mexico and the European Union, Commerce Secretary Wilbur Ross announced. Within hours of the U.S. announcement, EU officials said they were considering duties on a variety of American imports, most likely to include Kentucky bourbon.

Eric Gregory, president of the Kentucky Distillers’ Association, said in an interview with Associated Press that he was hopeful negotiations would avoid a trade war.

TMMK is owned by Toyota Motor Corp., a company based in Japan. Even so, over 8,000 people are employed at TMMK and nearly 9,500 people are employed by Toyota at various locations throughout Kentucky.

Kosei Shindo, chairman of the Japan Iron and Steel Federation, said in a press conference the U.S. tariffs include a process for exemptions if U.S.-based manufacturers cannot supply the steel needed.

“Many of the products we export from Japan cannot be made in the US or not in sufficient amounts, so we will be explaining that and seeking individual exemptions,” he said.

This article is provided via the Kentucky Press News Service.