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These groups have criticized a report submitted by US Secretary of Commerce Wilbur Ross to the White House on Sunday February 17. That report, which was based on Commerce’s investigation into the effect of light vehicle and vehicle parts imports on US national security, was not immediately made public.
When the investigation was launched in May 2018, Ross said that “there is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry.”
After receiving the report, President Donald Trump has 90 days to decide whether action – in the form of tariffs or quotas – will be taken.
“MEMA [the Motor and Equipment Manufacturers Association] is alarmed and dismayed that the Department of Commerce’s report on Section 232 tariffs on motor vehicles and motor vehicle parts will not be made public immediately. It is critical that our industry have the opportunity to review the recommendations and advise the White House on how proposed tariffs, if they are recommended, will put jobs at risk, impact consumers and trigger a reduction in US investments that could set us back decades,” the association said on February 18.
“The US auto sector plays a pivotal role in our economy, supporting millions of American jobs through its enormous annual capital investments across the country,” American Automotive Policy Council (AAPC) president Matt Blunt said in a statement.
“We believe the imposition of higher import tariffs on automotive products under Section 232 and the likely retaliatory tariffs against US auto exports would undermine – not help – the economic and employment contributions that FCA US, Ford and General Motors make to the US economy,” Blunt continued.
Indeed, retaliatory duties from Canada – following the imposition of Section 232 tariffs against that country last June – have driven US steel exports sharply lower year on year.
The Washington-based AAPC represents member companies FCA US, Ford Motor Co and General Motors.
In the wake of the initial Section 232 duties against steel and aluminium imports, Fastmarkets AMM’s US Midwest P1020 duty paid aluminium premium soared to multiyear high of 22-23 cents per lb last April. The premium has since retreated to 19.5-19.75 cents per lb as of February 19, compared with 13-13.5 cents per lb a year ago.
Meanwhile, the US Midwest hot-rolled coil index reached a near-decade high of $45.84 per hundredweight last July. The price was calculated at $34.04 per cwt ($680.80 per short ton) on February 15, compared with $37.17 per cwt one year earlier. Consumer crush “Tariffs are a tax on our customers, and would mean that Americans shopping for a new car would see the prices of many new vehicles increase. Imposing tariffs on imported vehicles and parts would be a mistake, with significant negative consequences for the US auto industry [and] our employees,” the Alliance of Automobile Manufacturers wrote on February 18.
The Center for Automotive Research investigated the potential outcome if such tariffs were implemented, highlighting the impact on US consumers.
In a report released this month, the center modeled 10 policy scenarios featuring various trade measures and deals, including the potential Section 232 tariffs and adoption of the United States-Mexico-Canada Agreement.
In each of those scenarios, the report projected higher average vehicle prices and lower sales.
“No matter how these policies are combined, they operate to raise consumer prices for new vehicles, while lowering US light vehicle sales, US gross domestic product, and total and new vehicle dealership employment,” the center claimed.
Depending on the trade policies enacted, the average US vehicle price could rise by $350-2,750, with those price effects corresponding to vehicle sales losses of 183,000-1,300,000, according to the report.
“Dealerships are likely to experience a decline in revenue totaling between $6.1 billion and $43.6 billion, with associated employment losses between 10,700 and 77,000 employees,” the report stated. In the broader US economy, gross domestic product was projected to decline by $6-30.4 billion, with total employment falling by 71,200-366,900 jobs.
And US automakers have already felt the disruptive impact of the Section 232 duties on steel and aluminium imports, the report noted. The tariffs cost Ford and General Motors $1 billion dollars each, the companies said late in 2018, citing volatile metal costs.
Earlier this month, a group of US lawmakers introduced legislation that seeks to reform Section 232 to better align the statute with its original intent as a trade remedy tool for the president and Congress to respond to genuine threats to national security.
And in mid-January, two Senators reintroduced legislation that would delay the imposition of additional Section 232 tariffs on US imports of automobiles and automotive parts.