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Association Of Equipment Manufacturers Representative Discusses U.S.-China Trade War

May 13, 2019
Originally published on May 13, 2019 5:16 pm
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AUDIE CORNISH, HOST:

There's one solution to this trade war that President Trump has tweeted repeatedly over the past few days. He says Americans don't have to pay tariffs on Chinese goods if they buy the same products from other countries or, even better, from the U.S. He said today that goes for U.S. manufacturers, too.

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PRESIDENT DONALD TRUMP: Open your division, or open up your product. Have it made in this country as opposed to made in China.

CORNISH: Many U.S. manufacturers do get their parts from China. To understand how easy it would be for them to make a swap, we turn to Kip Eideberg. He's with the Association of Equipment Manufacturers. Thanks for coming into the studio.

KIP EIDEBERG: Thanks for having me, Audie.

CORNISH: You represent a lot of firms. What are some of the ones that depend on China for the parts that go into their equipment?

EIDEBERG: Well, look. We have about a thousand member companies in the United States. And many of them - if not most - rely on some sort of input from China.

CORNISH: Can you give an example for those of us just, like, walking into a store and wondering what we might be purchasing?

EIDEBERG: Yeah, absolutely. Let's take a consumer-friendly example so a power generator - small power generator's 5 to 9 horsepower - seems like as good of an example as any given the weather that we've been experiencing. So many of the engines - and certainly many of the components that go into those engines - are made in China or other countries. And the idea that a manufacturer could simply turn around and source those engines from an American supplier does not align with reality.

CORNISH: Why?

EIDEBERG: Well, lots of reasons. Sometimes they're not available; they're not made here. Sometimes they are not of the quality that's required. Sometimes they're too expensive. Sometimes domestic manufacturers can't simply meet the demand for the manufacturer.

CORNISH: What would it take to make the switch? Or are you arguing that they don't want to, it's not financially appealing to them?

EIDEBERG: Well, I think anytime politicians try to micromanage how businesses run their supply chains, it doesn't end well. But I will say that, you know, as an industry, we do agree with the precedent that it is time for China to make some changes to their industrial and to their trade policy. They haven't been a good faith factor over the years.

But we should be focusing on negotiating with China, looking for structural changes, not doubling down on tariffs or forcing companies to change their supply chains.

CORNISH: Now, the president says that these trade talks are meant to benefit the U.S., including manufacturers. From your point of view, right, someone who helps represent these manufacturers, are they?

EIDEBERG: Well, if we can get to an agreement at the end of the day, then absolutely. But in the short term, we're seeing some real pain for equipment manufacturers. In fact, we forecast that, with these additional tariffs and the ones that we've already facing on steel, aluminum and Chinese inputs, the industry stands to lose about 400,000 jobs over the next 10 years.

Now, that's a 10-year timeframe, and we could wake up tomorrow and have an agreement with China. And certainly, we hope that would be the case. But I think that when you rely on tariffs, which are taxes on Americans and businesses, you know, it's a slippery slope.

CORNISH: Why shouldn't you endure a little pain if it will get to your end goal?

EIDEBERG: Well, that depends on how you look at, you know, the arc of trade negotiations. And again, I think we've been fairly patient. We've been supportive of the administration's efforts to address some of the issues with China. What we're saying is, you know, if we keep doubling down or tripling down on tariffs as a negotiating tactic, you know, in the long haul, that will have some consequences for our industry. And it will make us look at whether or not, you know, it's feasible to manufacture here or in other places.

So I think it's a trade-off at the end of the day. It's not necessarily about short-term pain. But it's about, you know, where do you want to manufacture? Where is the most advantageous place to manufacture? And we hope that it continues to be here in America.

CORNISH: That's Kip Eideberg. He's vice president of government affairs for the Association of Equipment Manufacturers. Thank you for speaking with us.

EIDEBERG: Thanks for having me, Audie. Transcript provided by NPR, Copyright NPR.