03/06/2025

Trump Softens Tariffs Blow for Automakers as Plastics Groups Step up Warnings

Plastics News | Steve Toloken | Mar. 4, 2025

Trump Softens Tariffs Blow for Automakers as Plastics Groups Step up Warnings

As President Donald Trump used the first major speech of his term to double-down on tariffs, plastics and manufacturing groups stepped up their warnings of rising costs and economic harm to tightly knit cross-border supply chains.

Plastics and chemical industry groups in both the U.S. and Canada, for example, said they were "deeply concerned" about the tariffs, while other manufacturing groups talked about "significant risk" to the auto industry and other sectors.

Those warnings came as Trump, in a televised speech to Congress March 4, said the tariffs will lead to more factories and investment in the United States and will combat what he called unfair trade practices by other countries.

He promised more tariffs in April, even as he allowed that the duties already announced will cause "a little disturbance" for the U.S. economy.

Still, there were signs Trump could be backing off some of the duties.

Trump has granted automakers a one-month exemption from the tariffs, press secretary Karoline Leavitt told reporters at a March 5 White House briefing. Tariffs on other products, a huge section of the economy, are going ahead, as are plans for reciprocal tariffs in early April, Leavitt said.

"We are going to give a one month exemption on any autos coming through USMCA," Leavitt said."Reciprocal tariffs will still go into effect on April 2, but at the request of the companies associated with USMCA, the president is giving them an exemption for one month so they are not at an economic disadvantage,"

Leavitt was referring to the U.S.-Mexico-Canada Agreement, the free trade pact Trump negotiated and signed in his first term to replace the North American Free Trade Agreement.

She said the request came from U.S. automakers Stellantis, General Motors and Ford.

U.S. Commerce Secretary Howard Lutnick told Bloomberg TV March 5 that current tariff discussions are aimed at stopping the flow of fentanyl into the U.S., a point echoed by Leavitt.

Lutnick pointed repeatedly to Trump administration plans on April 2 to detail reciprocal duties based on matching the tariffs other nations apply to U.S. exports.

While Lutnick focused on the tariffs as a tool to stop fentanyl, Canadian Prime Minister Justin Trudeau said March 3 that less than 1 percent of the fentanyl seized at the U.S. border comes from Canada and said there was "no justification" for the U.S. tariffs.

Plastics groups step up warnings

Both before and after Trump's speech, manufacturing industry groups stepped up their warnings about tariffs.

The U.S. plastics association said in March 4 statement it was concerned about new tariffs on imports from China, in addition to Mexico and Canada.

"These tariffs will disrupt the movement of essential machines, products and materials that keep American manufacturers running across sectors like health care, consumer products and automotive," said Matt Seaholm, president and CEO of the association. "[The association] remains deeply concerned about the tariffs on Canada, Mexico and China, and their impact on U.S. plastics manufacturing and jobs."

"While we understand President Trump's rationale, a competitive industry depends on policies that protect American manufacturing while ensuring stable supply chains," Seaholm said, adding that the association recognized the need for secure border and for stopping illegal drug trafficking.

He called for a "strategic, measured approach" to trade.

Similar to the plastics association in the U.S., the Canadian association expressed deep worry over the impact of the tariffs in a March 4 statement.

It also urged Canada's government to immediately move to broaden the country's trade relationships around the world.

"The Chemistry Industry Association of Canada is deeply concerned about the implementation of tariffs on Canadian imports by the United States which cause economic and social challenges on both sides of the border," CIAC said.

CIAC President and CEO Greg Moffatt said tariffs will raise costs and called on the Canadian government to pursue policies that recognize the "changing economic landscape," including by diversifying its trade relationships with other countries.

CIAC said that "expanding into new markets beyond North America — both east and west — is vital for economic growth and long-term prosperity."

A united statement

CIAC and the U.S. plastics association joined with the Mexican National Association of Plastics Industries, or Anipac, in a more general statement March 5 endorsing "a strong free trade environment."

"A strong regional trade alliance ensures access to cost-effective materials, enhances supply chain resilience, and boosts global competitiveness," they said. "Without these critical trade relationships, the cost of production would rise, limiting economic growth and reducing consumer choice across all industries that are heavily reliant on plastics."

As well, the U.S. Chamber of Commerce called for a "swift end" to the tariffs, saying they would raise prices.

"The chamber supports the administration's efforts to advance pro-growth policies like fewer regulations and less taxation that will grow our economy and expand opportunity; and to fix serious problems like our broken border and stopping the flow of fentanyl in this country," said Neil Bradley, chief policy officer. "We also want to work together to keep costs down, but tariffs will only raise prices and increase the economic pain being felt by everyday Americans across the country."

Trump: ‘Our turn' on tariffs

In his speech, Trump said the tariffs will lead to more factories being built in the U.S.

"Other countries have used tariffs against us for decades and now it's our turn to start using them against those other countries," Trump said, pointing to what he said was $1.7 trillion in announcements of new investment in the U.S. because of his policies from companies including Apple, OpenAI, Taiwan Semiconductor and Softbank.

He said his administration has put new tariffs on imported steel, aluminum, copper and lumber, and he pointed to plans for more duties, from broader reciprocal tariffs starting April 2.

"Whatever they tariff us, other countries, we will tariff them. That's reciprocal, back and forth," Trump said. "Whatever they tax us, we will tax them. If they do non-monetary tariffs to keep us out of their market, then we will do non-monetary barriers to keep them out of our market."

In his comments on reciprocal tariffs, he singled out China, India and South Korea.

"Tariffs are about making America rich again and making America great again, and it is happening and it will happen rather quickly," he said. "There will be a little disturbance, but we are OK with that. It won't be much."

Trump also called for tax reform legislation being debated in Congress to include the return of "100 percent expensing" for manufacturers, an apparent reference to restoring full depreciation from taxes of research and development costs.

The Trump administration's signature tax cuts in 2017 eliminated that, replacing full year 100 percent deductions with phased-in deductions over five years, to help offset the cost of other tax cuts.

But those phased-in deductions were delayed until 2022. Plastics groups have since lobbied for their repeal.

‘Significant risk' from tariffs

Other manufacturing groups echoed the concerns of the U.S. and Canadian plastics groups on tariffs.

The Motor Equipment Manufacturers Association (MEMA), which represents suppliers to the vehicle industry, warned March 5 that the deeply integrated North America car making sector faces "significant risk" from higher tariff costs as components can cross the U.S., Canadian and Mexican borders multiple times before final manufacturing.

"The community of vehicle suppliers remains fragile from years of industry volatility, workforce shortages, supply chain disruption and the pandemic," said Bill Long, president and CEO of the Washington-based group. "Tariffs of this scale place a significant burden on U.S. manufacturers, increasing costs, reducing profitability, impacting American jobs and the industry's ability to compete globally."

MEMA said vehicle manufacturing makes up the largest U.S. manufacturing sector, and said the tariffs raise "profound concerns" about the sector's ability to operate, absorb costs and grow and invest.

Similarly, the National Association of Manufacturers in Washington released a statement March 4 detailing economic harm it said manufacturers would face from tariffs, as it urged Trump to take other actions to mitigate the tariffs, like business-friendly tax, regulatory and workforce policies.

"The stakes couldn't be higher for manufacturers right now," said Jay Timmons, NAM president and CEO. "Many manufacturers are operating on thin margins, and the tariffs imposed today will further strain their resources."