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Sumitomo chief says Trump tariffs could have 'devastating' ripple effects

WASHINGTON – It's not just Sumitomo Rubber North America's Town of Tonawanda plant that could suffer under President Trump's tariffs. It's the entire company – and the entire American economy.

That's what Richard Smallwood, Sumitomo Rubber North America's president and CEO, had to say in an interview with The Buffalo News on Friday, a day after he criticized the proposed tariffs at a Commerce Department hearing.

Trump is pondering tariffs of up to 25 percent on imported autos and auto parts. To hear Smallwood tell it, that would force price increases and potentially do grave harm to the American economy – and, in turn, to Trump's Republican Party.

"This is the guy who was supposed to make America great again, and he puts us into a recession?" Smallwood said.

In the early morning phone interview, Smallwood stressed that the Town of Tonawanda plant, which employs about 1,400, is an important part of his company's future. The plant is in the midst of an expansion that has added about 300 jobs in the past four years, and that aims to quadruple the plant's tire output by 2020.

"The people at that plant have had to make a radical change" as the plant's output grows, Smallwood said. "They're working very hard."

Smallwood said at the Commerce Department hearing that tariffs could put a crimp in the company's ongoing expansion plans, but in the interview, he stressed that Sumitomo wants to keep growing in the Town of Tonawanda.

"The expansion is necessary for us," Smallwood said. "We need the product out of that plant. It's a great selling point for us."

Sumitomo says Trump tariffs could threaten WNY expansion

Town of Tonawanda Supervisor Joseph H. Emminger said that he doesn't think Trump and others are looking at the potential local impact tariffs would have.

"From a local standpoint, this is a very disturbing announcement by Sumitomo, and I would imagine GM may not be far behind," Emminger said, referring to the General Motors manufacturing facility also located in the Town of Tonawanda. "We are certainly going to be working with the industries in our town, along with our state and federal officials to try and make the best out of a potentially bad situation.

"We're on the low end of the food chain, the local governments. ... We'll just to continue to do what we can on this issue. We deal with the consequences of the decisions made in Washington."

Emminger said he realized the potential impact on Tonawanda as soon as the Trump administration threatened the tariffs.

"Sumitomo has been a member of our community for decades," Emminger said. "They come in and they announce that they are undergoing this expansion, they bought additional land in last 24 months to facilitate that expansion, and then this comes up. This was unexpected, but not surprising."

Smallwood said that customers – especially those that buy truck tires – want to buy American. That being the case, Sumitomo and other tire manufacturers have been expanding their U.S. production in recent years.

"We're in a resurgence in tire manufacturing in the United States," Smallwood said. And as a result, the idea of a tariff on imported tires "is not relevant anymore."

He said the company's future, and the economy's, is uncertain so long as Trump is considering tariffs on the auto sector, one of the largest in the American economy.

"The tariffs being proposed by the Trump administration are a threat to our continued expansion in Buffalo, as they are for any automotive-related business in the U.S.," Smallwood said. "That said, these tariffs will not only effect automotive-related businesses, they will effect the U.S. economy as a whole, and we need to be cognizant of that."

However, it's difficult to predict the degree of damage the tariffs will do without knowing exactly what they will be, he added.

"You don't know what in the world Trump will do," Smallwood said.

Smallwood, a conservative Republican himself, said he's not uniformly opposed to tariffs. If any countries are engaging in unfair trade practices, it's perfectly appropriate to tailor specific tariffs at particular products coming out of those offending nations, he said.

But he fears that a Trump tariff that affects wide swaths of the auto and auto parts industries would do grave damage, starting with higher prices.

Smallwood is by no means alone in that assessment. The industry-backed Center for Automotive Research released a study Thursday that said tariffs could raise the cost of a new vehicle by anywhere from $980 to $4,400, depending on the level of the tariff and the sticker price of the vehicle.

People who want to boost American manufacturing may like the concept of tariffs, "but it will be different when it hits their pocketbook," Smallwood said.

Higher prices could lead to reduced auto sales, which could mean cuts at auto plants and auto parts plants and a trickle-down slowdown in every business that serves them, he added.

"There's a multilayered effect," Smallwood said.

Fearing such troubles, Republican politicians have long opposed tariffs and advocated free trade. But now, Smallwood noted, that appears to have changed.

"I think that some people are just afraid to oppose Trump," he said. "They don't want to face the backlash."

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