Survey: More Headwinds For Auto Sector Manufacturing


DETROIT, Mich. The prospect of even more tariffs on China from the Trump White House is a considerable headwind to American manufacturing, including the auto sector, but manufacturing as a whole still expects solid growth this year, according to an industry survey released Wednesday.

While manufacturing growth projections have fallen since December, firms expect revenues to increase by four percent this year, which is “still very strong growth,” according to Timothy Fiore of the Institute for Supply Management.

A semi-annual ISM survey on manufacturing shows companies “more and more are passing price increases on to customers because of tariffs,” Fiore told reporters, pointing to some “really alarming” signals on trade that had showed up in ISM’s earlier monthly reports.

The Trump White has been using tariffs on China and the European UNion as a cudgel to try and level the trade imbalances with those two markets and appease the Republicans voter base on rust-belt states. The President’s negotiators are meeting Friday with Chinese negotiators to try and hammer out a new deal, but Trump has already signaled ahead of the talks that he is threatening tariffs on another $200 billion plus of Chinese exports to the U.S.

Manufacturers who rely on Chinese suppliers, including many auto and supplier companies, having adapted to existing tariffs, are now preparing for an even bigger hit after Trump announced plans to more than double existing tariffs on $200 billion in Chinese goods to 25 percent starting Friday.

Fiore said the increased tariffs likely will stay in place for months creating “a big headwind coming our way.” And among the goods impacted a “big part of that are intermediate goods.”

Anthony Nieves, who heads the ISM survey of the services sector, said the tariffs are “impacting their economy a lot more than what we’re feeling over here in the states. There’s a lot of pressure on them.”

In fact, China reported early Wednesday that exports fell by more than expected in April, dropping 2.7 percent even as its surplus with the United States remains large — something US negotiators are seeking to remedy in the trade talks.

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David Kiley is Chief of Content for The BRAKE Report. Kiley is an award-winning business journalist and author, having covered the auto industry for USA Today, Businessweek, AOL/Huffington Post, as well as written articles for Automobile and Popular Mechanics.