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Alabama, a top exporter, could feel tariff pinch

By Aaron Hagstrom in New York | China Daily USA | Updated: 2018-03-09 23:44
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Alabama's automakers and soybean farmers could be among those hurt in any tit-for-tat retaliation to US President Donald Trump's tariffs on steel and aluminum.

On Thursday, Trump signed an order imposing import tariffs of 25 percent on steel and 10 percent on aluminum. The order would go into effect in 15 days.

Alabama, which voted overwhelmingly for Trump in the 2016 US presidential election, exports the most cars of any US state to China, and much of its soybean crop.

Motor-vehicle exports are Alabama's No. 1 export. Only Michigan and South Carolina export more. Exports topped $7.75 billion in 2017, with $2.2 billion going to China, a 10 percent increase from 2016, according to the state's Commerce Department. Only Michigan and South Carolina export more vehicles.

The auto industry employs nearly 40,000 people in Alabama and assembly plants produced more than a million vehicles in 2016, with the Hyundai plant in Montgomery leading the production list. Hyundai directly employs about 3,000 full-time workers, and thousands more work at Hyundai supplier plants throughout the state. That supply network of more than 160 companies employs another 27,000

Mercedes-Benz US International, which makes luxury SUVs and cars in Tuscaloosa County, has about $5 billion in annual exports and is the state's biggest vehicle exporter.

Huntsville will be the site of a new $1.6 billion auto plant announced in January by Toyota Motor Corp and Mazda Motor Corp. The plant would employ up to 4,000 and make about 300,000 vehicles a year. Toyota already has a large engine plant and a network of automotive suppliers in the state. Toyota said in a statement that steel tariffs will increase costs and prices for auto companies.

The threat of US tariffs on steel and aluminum might lead China to threaten restrictions on the import of US soybeans, which contribute to nearly 11,000 jobs in Alabama, according to an Alabama Cooperative Extension System economic impact study.

The state's soybean crop has been surging in value, rising to more than $155 million last year from $129 million in 2016, according to the National Agricultural Statistics Service.

China was the largest importer of U.S. agricultural products in 2016, and soybeans were at the top of the list with $14.2 billion in purchases, according to the US Department of Agriculture.

"Agriculture is going to be paying the price for the protection of the steel and aluminum industries," said Herb Karst, a spokesman for Farmers for Free Trade, in a CNNMoney article.

The aluminum tariff has the state's breweries that rely on sales in aluminum cans concerned.

"We operate on a very small margin as all breweries of our size are. Our packaging cost is a huge component of that," said Harris Stewart, founder and CEO of TrimTab Brewing Co.

The state's Port of Mobile is one of the nation's largest for steel and aluminum.

In 2015, the port opened a terminal for steel shipments. It handles about 5 million tons of steel annually, including about 3 million tons of imported slabs.

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