The Pacific Northwest is especially dependent on international trade and the threat of a global trade war has many business leaders on edge. Perhaps none more so than at Daimler Trucks in Portland that employees more than 2,000 workers who are mostly engineers.
Despite some mixed signals, President Trump has moved ahead to impose a 25 percent tariff on imported steel and a 10 percent on imported aluminum. He also has singled out Mercedes-Benz for an outright ban on imports, citing national security and his personal angst at seeing New York’s Fifth Avenue clogged with the popular German luxury car.
Mercedes-Benz manufactures SUVs, GLE coupes and C-class cars at its Tuscaloosa, Alabama plant. BMW manufactures luxury cars in Spartanburg, South Carolina, which the company says produces 1,900 vehicles per day, the highest daily output of any BMW car plant in the world. Spartanburg is the exclusive manufacturing site for BMW’s X-class vehicles, which are exported worldwide.
For Oregonians, a greater concern would be the impact of Trump’s tariffs on Daimler Trucks, which maintains its North American headquarters in Portland. Much of the company’s truck manufacturing has been shifted to the Southeast and Mexico. What largely remains in Portland are corporate teams and engineers “designing the future of commercial vehicles.”
Daimler Group is the corporate parent for Mercedes-Benz Cars and Daimler Trucks.
Officials at Daimler aren’t alone in fretting about fallout from a potential trade war. The Seattle Times quoted officials from the aluminum and agricultural sectors, as well as union officials, raising alarms about impacts from tariffs on multi-country supply chains, direct exports and price increases that could affect everything from Boeing airplanes to new housing. A Seattle homebuilding official said higher tariffs on steel could increase the price of a new house by up to $5,000.
Depending on how China and the European Union impose reciprocal tariffs, emerging markets pursued by Northwest exporters such as winemakers could be squeezed. Tariffs slapped on by Mexico and Canada also could have disruptive effects.
In addition to the tariffs, what baffles and irks US trading partners is the unpredictability of Trump's trade policy, if it can be called a trade policy. Negotiations occur, agreements are reached and then Trump goes in a different direction, as he did with the bilateral trade deal struck with South Korea and with the Chinese talks two weeks ago.
Trump’s trade steps also raise hackles on Capitol Hill. Many Trump supporters were stunned when he agreed to back off punishment that the Chinese said could force the collapse of ZTE, a huge telecom company facing charges of ignoring US export sanctions imposed on North Korea and Iran. A Texas court fined ZTE $1 billion and ordered it could not receive any US-made components and software for seven years.
EU officials, who share US concerns about restrictive Chinese industrial policy and alleged intellectual property theft, have urged the Trump administration to form a united front on policies and negotiations aimed at winning major concessions from the Chinese.
However, Trump’s mistrust of multilateral arrangements appears to drive his actions. Despite warnings from economists, Trump has put trading relations with Canada, Mexico, China, South Korea, Japan and the European Union in a state of flux. Reciprocal tariffs are being imposed and talks about updating existing trade deals have stalled.
Trump’s nationalist trade policy may win applause in steel-producing states, but could trigger discontent and growing fears of an economic slowdown in the rest of the country as crucial midterms approach this fall that will determine who controls Congress for the next two years.