Study From MEMA Reports BAT Tax Could Have Negative Impact on Manufacturing Jobs

by Jake Tully - Published: 6/01/2017

In a recent statement released by the Motor & Equipment Manufacturers Association (MEMA), the organization is reputedly warning against the Border Adjustment Tax as is currently drafted by proposed by the United States House Republican tax reform.

According to MEMA, the association is in favor of tax reform that promotes strength in United States-based manufacturing jobs and productivity within the manufacturing industry, they report the Border Adjustment Tax (BAT) will not be conducive to growth.

The BAT tax has not yet been passed nor denied by decision-makers in Washington, though it has been the subject of recent hearings.

MEMA reports that their position on the BAT tax is supported by a study commissioned by the association by the Boston Consulting Group. The study’s findings reported reduced spending power for customers in the United States as well as a marked decrease in overall manufacturing jobs.

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According to the Boston Consulting Group generated study, a lack of consumer spending would require vehicle manufacturers as well as dealers to impose costs to their suppliers in order to decrease retail price. Additionally, the survey reports that commercial vehicles would see less parts within them, in categories such as driver-assist features and safety-related technology.

This lack of vehicle parts may then lead to a drop of 3% supplier content per vehicle, which may displace nearly 45,000 manufacturing jobs, says MEMA.

“President Trump has said that he wants to increase jobs in America and put forward tax reform that is in the best interest of American businesses, consumers, and workers,” said Steve Handschuh, MEMA President and CEO. “We believe reforming tax rates, combined with workforce, trade, infrastructure, and technology initiatives will promote U.S. growth and innovation in the supplier industry and across the U.S. economy. But this data shows that a BAT would put a large number of jobs at immediate risk.”

MEMA reports that vehicle part manufacturers comprise the largest sector of United States-based manufacturing jobs, contributing close to 3 percent of the overall GDP of the United States. In this sector, MEMA reports there are nearly 4.26 million jobs.