Trump Eyes Auto Import Tariffs Via Section 232 Investigation

by Bamidele Ogunberu Posted on May 24th, 2018

Washington, D.C., USA: Commerce Secretary Wilbur Ross has initiated a Section 232 investigation into the national security implications of automobile imports, the Commerce Department said on Wednesday. The decision followed a “conversation” with President Trump, who said in a separate statement that he instructed Ross to consider the move.

“There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry,” Commerce Secretary Wilbur Ross said in a statement.

The Commerce Department announcement said the investigation “will consider whether the decline of domestic automobile and automotive parts production threatens to weaken the internal economy of the United States, including by potentially reducing research, development, and jobs for skilled workers in connected vehicle systems, autonomous vehicles, fuel cells, electric motors and storage, advanced manufacturing processes, and other cutting-edge technologies.”

The department claimed in the statement that imported passenger vehicles account for 48 percent of passenger vehicles sold in the United States, up from 32 percent 20 years ago, while “employment in motor vehicle production declined by 22 percent.”

Minutes before the announcement, the White House released a statement saying that President Donald Trump asked Ross for the probe.

“Core industries such as automobiles and automotive parts are critical to our strength as a Nation,” the White House statement said.

Commerce Secretary Ross sent a letter to U.S. Secretary of Defense James Mattis to inform him of the investigation.

“Today, I met with Secretary of Commerce Wilbur Ross to discuss the current state of our automobile industry. I instructed Secretary Ross to consider initiating a Section 232 investigation into imports of automobiles, including trucks, and automotive parts to determine their effects on America’s national security,” Mr. Trump said in a statement.

He added, “Core industries such as automobiles and automotive parts are critical to our strength as a Nation.”

The president had teased the announcement throughout the day, saying he had “big news” for the U.S. auto industry.

“There will be big news coming soon for our great American Autoworkers. After many decades of losing your jobs to other countries, you have waited long enough!” he tweeted in the morning.

The investigation, known as a Section 232 investigation, would determine whether the import of cars and truck threatens national security interests. Section 232 of the Trade Expansion Act of 1962 authorizes the Commerce Department to determine “the effects of imports of any article on the national security of the United States.”

Tariffs based on national-security arguments generally take months to execute, because the administration is required to conduct detailed studies that provide the rationale for such moves. Applying tariffs or another remedy under Section 232 of the 1962 law would require a lengthy investigation and report from the U.S. Commerce Department.

The investigation into possible auto tariffs also is expected to be more involved and potentially last longer than the administration’s 10-month study of aluminum and steel tariffs, an official said.

The probe will look into cars, sport-utility vehicles, vans and light trucks, the Commerce Department said in a statement, adding that the investigation will “consider whether the decline of domestic automobile and automotive parts production threatens to weaken the internal economy of the United States.”

The Trump administration is expected to invite public comment and hold a hearing on the issue.

It wasn’t immediately clear whether tariffs would be recommended at the end of the investigation or how broadly they would apply. For example, Nafta partners, which are closely involved in U.S. auto production, might be exempt. The moves appeared to target Japanese and European auto makers.

Under World Trade Organization agreements, the U.S. currently charges tariffs—essentially a tax at the border—of 2.5% on light cars and of 25% on trucks coming from countries where the U.S. doesn’t have a trade pact.

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Bamidele Ogunberu

Bamidele Ogunberu

A prolific writer, Bamidele has worked in generalist and public relations capacities for an energy company before making the cross over into journalism and has never looked back
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