Why Tariffs On Mexico Terrify The Auto Industry The U.S. auto industry opposes President Trump's threatened tariffs on goods imported from Mexico. It says the taxes would increase the cost of vehicles and play havoc with supply chains.
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Ohio To Juárez And Back Again: Why Tariffs On Mexico Alarm The Auto Industry

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Ohio To Juárez And Back Again: Why Tariffs On Mexico Alarm The Auto Industry

Ohio To Juárez And Back Again: Why Tariffs On Mexico Alarm The Auto Industry

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ARI SHAPIRO, HOST:

Vice President Mike Pence met with Mexican officials today in Washington. He wants to pressure Mexico to slow the flood of Central American migrants headed to the U.S. border. President Trump says starting Monday, the U.S. will put tariffs on all Mexican goods coming into the country if Mexico doesn't do more to stop migration. If the tariffs are imposed, it would play havoc with supply chains of many U.S. companies. NPR's Camila Domonoske looks at the auto industry.

CAMILA DOMONOSKE, BYLINE: You have a nervous system. Your car has a complex network of wires tied together into something called a wire harness. It connects electronics throughout a vehicle.

SUE HELPER: So it's a huge, heavy bundle of wires, and it's gotten dramatically more complicated as cars become more electronic.

DOMONOSKE: Sue Helper is a case Western Reserve University economist. Every car has a different configuration for its wires.

HELPER: If they're done wrong, you can get electrical problems that you'll never solve (laughter).

DOMONOSKE: So before those wires go in the car, you bundle them together. And for U.S.-made cars, that bundling almost always happens in Mexico, specifically in Juarez.

HELPER: Wiring harness capital of the world.

DOMONOSKE: It takes a lot of human hours to do this work, and labor is cheaper in Mexico. But the bundling of wires together is just one step in a long process. At a plant in Warren, Ohio, workers stamp out metal parts that will connect wiring to just about every electronic thing in a car.

HELPER: And these presses go so fast that you can't really see them. It's amazing how quickly they move.

DOMONOSKE: Those parts go to Mexico, get attached to wires, and the wires get bundled together and then come back the U.S. to go in a car. Smaller parts can have their own wiring harnesses, too. Brad Kraft is the CEO of Hopkins Manufacturing Corporation, which, among other things, makes parts for trailers, like a device to stop a runaway trailer if it breaks off. It starts off simply in Emporia, Kan.

BRAD KRAFT: We manufacture the plastic box in Kansas, bring it down into our manufacturing facility in Mexico.

DOMONOSKE: There in Juarez, his company will add other components and of course bundle together the wires.

KRAFT: And bring it back into the U.S. as a complete, finished good.

DOMONOSKE: Ready to be installed in a trailer or sold at auto parts stores. This happens all the time and not just with wiring. The process of building a seat might send the same part back and forth across the border multiple times, which would mean multiple tariffs even if a car is assembled in America and even on parts that started out in America.

The supply chain didn't always work like this. Sue Helper says that decades ago, a lot of work like this would have been done close together in the U.S. And the process could shift in the future, but experts say these tariffs are not likely to bring those wire bundling jobs back to the U.S. Instead they might push them overseas to other places with low labor costs. Ann Wilson is with the Motor & Equipment Manufacturers Association.

ANN WILSON: Keep in mind the wire that goes into those wire harnesses, the fabric that is coated around those wires as well as all of the connectors are oftentimes made in the United States. So if we make it more expensive to make wire harnesses in Mexico and they move that offshore someplace else, we are going to lose those jobs in the United States.

DOMONOSKE: That's probably a long-term concern. In the short term, Brad Kraft says he can't just pick up and move his factory from Juarez. He's only got a week of warning and no way of knowing how long these tariffs would last.

KRAFT: So there's very little that we can do.

DOMONOSKE: Just one thing, really - prepare to pay the tariff and raise prices as a result, a change which would be felt by U.S. consumers. Camila Domonoske, NPR News.

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