Latest news with #JayTimmons
Yahoo
24-05-2025
- Business
- Yahoo
Manufacturers could benefit from Trump's 'big, beautiful' bill depending on what they make
Advocates for the manufacturing sector have hailed the advancement of President Trump's "big, beautiful bill" as a landmark moment for the sector, but at least two provisions could cut the ebullience for some factory owners, depending on what they produce and their company structure. The dynamic appears particularly acute for green energy manufacturers, as well as for multinational manufacturers with facilities both in the US and elsewhere. Both are set to eat some proverbial spinach alongside the range of goodies clearly on offer in the 1,000-plus-page package. Overall though, the focus from many is on tax provisions in the bill that could boost company bottom lines, like an increase in the pass-through deduction as well as tax credits for things like depreciation, interest payments, and factories. "In short, this is a manufacturers' bill," said Jay Timmons, the National Association of Manufacturers president, touting the tax credits in particular that will be implemented if they are eventually signed into law by the president. Yet some were quick to point out that other subsectors will face challenges. None more so than green energy, with the bill set to include a rollback of clean energy credits implemented during the Biden administration for things like the making of solar panels and electric vehicles. "These are just massive headwinds for US manufacturing clean energy, which was already facing a tough global environment," said Alex Jacquez, a former special assistant to Biden for economic development and industrial strategy, in an interview. Passage of the bill as it is could lead to "much lower levels of ongoing investment," he added, as well as outright project cancellations "for sure." And markets may agree, to an extent. Clean energy stocks were down this past week, with solar stocks especially hard hit after the bill advanced. Overall, the bill has a range of provisions for factory owners, most notably a new plan for 100% expensing for structures that could be felt quickly. This would allow companies to immediately deduct the costs of building new factories and updating existing ones, with the credit currently set to be in force from 2025 through 2028. This provision is set to join other parts of the bill that would reinstitute previous business-world deductions around things like depreciation of property, interest expenses, and research and development costs. The bill also makes permanent the 199A deduction at a new rate of 23%. That deduction — also known as the pass-through deduction — is focused on often smaller businesses organized as S corporations or partnerships. The National Association of Manufacturers says 96% of manufacturers are organized as pass-throughs. Overall, it's a suite of tax credits that has also led to highly ambitious estimates from some of what the legislation will mean for economic growth. The White House, for instance, has projected that the bill — fueled by these provisions in particular — could lead to GDP growth around 4%-5% annually in the coming years. Most outside analysts suggest much more modest growth will be in the offing. Part of these estimates for slower growth are the result of a bill that is primarily focused on extending existing tax cuts for both individuals and businesses — as well as new cuts in the offing. In addition to the green energy cuts, another change in the bill is around section 899 of the IRS code to tighten restrictions on what Republicans call 'discriminatory foreign countries' with new taxes to combat some of their practices. This could directly impact companies that operate or are based in these nations. A release from a group called the Global Business Alliance reacted to those provisions, saying changes to this section will threaten US manufacturing and reporting that impacted international companies support 2.9 million manufacturing jobs — or 22% of US manufacturing employment. "The impact of this punitive and discriminatory provision will be felt by workers in communities like Paris, Kentucky, and London, Ohio, not Paris, France, or London, England," Jonathan Samford, the group's president and CEO, said in a statement. And that's in addition to an energy rollback in the bill that includes last-minute changes put into place just before the final vote that could make the credits expire more quickly. One last-minute change would require projects to break ground within 60 days of the bill's signing to qualify for some credits. Jacquez calls the passed bill "as close to full repeal as they can get" of that piece of Biden's Inflation Reduction Act (IRA). Groups have estimated wide-reaching effects could follow. Advanced Energy United says that the provisions could undermine $3 trillion in economic benefits currently being felt in the green and "advanced" energy sector. They also say it could jeopardize the 13.7 million American jobs that these credits had been projected to generate in the coming decade. "We call on the Senate and allies across Capitol Hill to ensure that the final reconciliation package preserves key tax policies," said the group's CEO, Heather O'Neill. And advocates like O'Neill could find an audience when the bill reaches the Senate in the weeks ahead. A range of red-state Republicans already highlighted the positive effects these green energy credits are having in their states as they've suggested changes need to be in the offing. Jacquez added "the pro-IRA caucus in the House just was not willing to go to the mat in the way, say, the SALT caucus was," in reference to last-minute changes that blue-state Republicans were able to secure over state and local tax deductions. "I think in the Senate, the negotiations will be much different," he added. Other changes in the Senate potentially in the offing could make the bill into a further win for manufacturers, with some senators already suggesting that some of the business-world provisions currently written with an expiration date — like for factories — be made permanent. In his statement following the bill's advancement, NAM's Timmons pledged to keep working with lawmakers to make sure the final bill is "maximally effective." Ben Werschkul is a Washington correspondent for Yahoo Finance. Click here for political news related to business and money policies that will shape tomorrow's stock prices Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
04-04-2025
- Automotive
- Yahoo
Auto Industry, Consumers Brace for Global Tariff Fallout
Automaker trade groups call for high-level negotiations between political leaders as tariffs upend markets and usher in a new era of uncertainty. US automakers have publicly remained silent on issue of 25% auto tariffs and the new "reciprocal" tariffs, though the first effects from this week's announcement are already being felt at home. Auto dealers in the US faced an uptick of shoppers seeking to buy existing vehicles before the tariffs kick in, though the longer-term effects of the tariffs remained uncertain for dealer inventories in the coming months. As the European Union and other major US trade partners raced to respond to the Trump administration's "reciprocal" tariffs, formally announced on April 2, foreign automakers and other heavy industries faced a starkly different world than on Monday of this week. But the first effects on jobs materialized on this side of the Atlantic. Stellantis plans to lay off some 900 workers, at least temporarily, in the wake of the announcements of the new tariffs, and will also halt production at two plants in Canada and Mexico, one of which produces the new Dodge Charger Daytona EV. An additional 4,500 workers in Canada are expected to be laid of as well, as soon as Monday, April 7. The new tariffs drew sharp reactions from some domestic trade groups representing auto manufacturers and suppliers, even though the newly announced "reciprocal" levies wouldn't be added to the 25% vehicle import duties revealed earlier. "The stakes for manufacturers could not be higher. Many manufacturers in the United States already operate with thin margins," said National Association of Manufacturers President and CEO Jay Timmons in response to the tariffs announced on April 2. "The high costs of new tariffs threaten investment, jobs, supply chains and, in turn, America's ability to outcompete other nations and lead as the preeminent manufacturing superpower." US automakers themselves, however, largely stayed silent on the issue of the new "reciprocal" tariffs, avoiding direct statements regarding the measures, and for the most part only issuing internal communications to dealers in regards to inventory. The UAW issued a formal statement last week sounding a positive note in regards to the 25% tariffs on vehicles announced earlier in March, but has not addressed the new "reciprocal" tariffs. "We applaud the Trump administration for stepping up to end the free trade disaster that has devastated working class communities for decades," UAW President Shawn Fain said in a statement on March 26. "Ending the race to the bottom in the auto industry starts with fixing our broken trade deals, and the Trump administration has made history with today's actions. "With these tariffs, thousands of good-paying blue collar auto jobs could be brought back to working-class communities across the United States within a matter of months, simply by adding additional shifts or lines in a number of underutilized auto plants," a statement from UAW added. The new "reciprocal" tariffs announced this week also drew swift reactions from trade groups representing European automakers, some of which have no US manufacturing presence to soften the impact of the new levies. "The announced imposition of a 10% tariff on all UK products exported to the US, whilst less than other major economies, is another deeply disappointing and potentially damaging measure," said Mike Hawes, chief executive of the UK-based Society of Motor Manufacturers & Traders. "Our cars were already set to attract a punitive 25% tariff overnight and other automotive products are now set to be impacted immediately. These tariff costs cannot be absorbed by manufacturers, thus hitting US consumers who may face additional costs and a reduced choice of iconic British brands, whilst UK producers may have to review output in the face of constrained demand." British brands, traditionally representing smaller-volume luxury automakers, are expected to be particularly affected by the 25% auto tariffs, with Land Rover, Mini, Jaguar, and others having maintained a manufacturing footprint primarily in the UK, even while their corporate parents reside elsewhere. Not only will vehicles produced in Europe and elsewhere be affected by the administration's latest actions, but the tariffs are also expected to have an effect on vehicles produced in the US for export. And in this case, both US and foreign automakers will be feel the fallout, trade groups warned. Some notable examples of the former include Mercedes-Benz and BMW plants in the southern states that produce SUVs for North America and for export elsewhere in the world—a significant category by transparent volume. The auto tariffs, which will also cover imports of spare parts produced by suppliers, sparked calls for negotiations by individual countries and automakers, though a concrete strategy for bargaining with the US administration that might immediately bear fruit remained hard to find. A single strategy for addressing the tariffs is unlikely to emerge, as different automakers now face very different challenges, but US automakers face their most immediate hurdles with Canadian and Mexican plants and suppliers. When it comes to auto parts, the tariffs on imported components are set to go into effect on May 5. "European automakers are committed to being active in the US, making an important contribution to the US economy, accounting for around half a million jobs across the auto sector, exporting over 750,000 vehicles to the US in 2024, and actively investing in local communities to foster economic prosperity," said Sigrid de Vries, Director General of the European Automobile Manufacturers' Association. "We urge our leaders to meet urgently so that they can find a solution to any issues preventing free and fair trade between historic allies and allow the EU-US relationship to flourish once again." US automakers' main exposure to tariffs will be reflected not only in the cost of parts, but also through assembly of domestic-branded vehicles in Canada and Mexico, with the latter having seen a factory building boom over the past decade that attracted US and European brands alike. Uncertainty over implementation of the tariffs could cause cargo back-ups on the borders with Canada and Mexico, it is feared, and also in US ports as automakers adjust shipping schedules. The good news for Canada and Mexico trade, if any, is that it is exempt from the baseline 10% tariff. The more granular effects of the tariffs have yet to be felt by auto dealers and consumers, as dealers are currently sitting on a supply of vehicles that were delivered weeks or months earlier. So price hikes, even though they are on the way, won't hit dealerships right away. Auto dealers have already begun to feel an uptick in the numbers of vehicle shoppers eager to buy cars and trucks ahead of the tariffs—a trend that may persist while pre-tariff inventory lasts—with used cars also predicted to see a bump in retail prices as a result. The spring and summer car shopping season, therefore, could see two separate populations of pre-tariff and post-tariff new vehicles, as well as stronger demand for off-lease used cars. Are the tariffs, if they persist for months, likely to affect your vehicle purchase plans or their timing this year? Let us know in the comments below.
