A Proposed Tariff of 25% May Affect Auto Glass

The United States Government has proposed several tariffs that would affect the automotive industry, including windshields. The proposed tariff located in Docket No. USTR-2018-0026 has sparked a general concern from many automotive glass businesses. If passed, there would be a 25 percent increase on auto glass that is manufactured in China and shipped into the U.S. This has many who have businesses or purchase their glass from Chinese manufacturers deeply concerned.

Two main points of their apprehension involve the increase in cost and the potential risks to vehicle owner’s safety. Many in the industry believe the most immediate impact would be an increase in the cost for those purchasing automotive glass from China.

“Basically we would have to adjust the cost of our product upward if this were to pass. Our company has already been communicating with our customers about this issue,” Henri Tam, XYG Auto Glass North America Corporation president said.

Due to the magnitude of potential impacts on the industry many have joined together to contact President Trump as well as U.S. representatives voicing their concern about the proposed tariff. They aim to spread awareness to those in the industry who may have not been made aware of the tariff. Letters and official statements have been submitted for consideration prior to the submission deadline for items of concern in Docket No. USTR-2018-0026. The deadline to submit any concerns is September 6, 2018. For those who would like to submit their comments, click here.

“The tariffs will certainly put an upward pressure on current market pricing and create yet another burden on the American consumer as well as this industry,” Charles Atkins, president of All American Glass Distributors said in a letter to Robert Lighthizer, of the office of the U.S. Trade Representative.

Opponents contend driver safety comes into play because the auto glass and windshield business is fueled by needs. A customer who has a broken windshield needs to have it replaced in order to have proper visibility while driving – it’s not a want. Opponents say it’s also not uncommon for technicians and auto glass shop owners to use aftermarket glass when replacing a broken windshield to make the price more affordable for their customers. Unfortunately, higher prices on overseas products often equate to a lower availability for specific model numbers of auto glass in the United States.

“If the product isn’t going to be as readily available you’re looking at possible shortages for the specific part numbers needed to complete a job,” Tam said.

“An increase in cost to consumers will result in more families operating their motor vehicle with a windshield that is no longer able to function as a safety device in their vehicle,” William Kryger, of Kryger Glass said in his letter to the President Trump.

What about the ultimate goal of the tariff – to bring business back to the states? “If someone wants to open a new facility elsewhere I think it wouldn’t be wise because this is likely to be temporary,” Tam said. Additionally, the costs associated with a corporation devoting resources and capital in a new location would be large. “This is not including the additional time it would take to get the facility up and running,” Tam added.

“The way I see this is …the U.S. Government is trying to force China to change its practices on other things that are not related to glass. I think this is just a tool the U.S. Government is using and it’s not fair to those in the auto glass industry,” Tam added. The potential for added pressure from our government onto China has not been confirmed by any member of Government currently working on this tariff.