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If the United States ultimately imposes import restrictions on such products, that could have a trickle-down effect on the country’s consumption of metals, including steel and aluminium, which are used in vehicles.
Ross started the investigation on Wednesday May 23, according to Commerce. By law, the agency must submit a report and conclude its investigation within 270 days, although President Donald Trump will have months after that to determine the final outcome.
The investigation’s outcome hinges on whether US imports of automobiles undermine the country’s national security. In similar 232 cases that were concluded in the first half of 2018, Trump and Ross determined that steel and aluminum imports did pose such a threat.
“There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry,” Ross said in a statement on May 23. “The Department of Commerce will conduct a thorough, fair and transparent investigation into whether such imports are weakening our internal economy and may impair the national security.”
Over the past 20 years, imports of passenger vehicles have grown to account for 48% of cars sold in the US from 32%, according to Commerce. US employment in vehicle production fell by 22% from 1990 to 2017, the agency said.
The investigation covers sports utility vehicles, vans and light trucks, and automotive parts as well as general passenger vehicles, while the report could touch on topics from autonomous vehicles, advanced manufacturing and electric motors.
About 27% of US steel shipments went to the automotive sector in 2016, the single-largest end market for the metal after construction, according to the data from the American Iron and Steel Institute.
If US automotive imports fall as a result of Section 232 restrictions, that could prove a boon for US automakers and, indirectly, their US steel suppliers. The same analysis could apply for aluminium, a growing alternative material in automotive bodies.
US steel bar products, like special bar quality (SBQ) steel, also flows into automotive components, so SBQ prices and consumption could benefit from US tariffs or quotas on automobiles.
Hot-rolled coil, a benchmark steel product that is relevant to automotive uses, has risen 45.1% over the past year, partly due to the Section 232 import restrictions on steel products. American Metal Market’s hot-rolled coil index is currently at $44.26 per hundredweight fob Midwest mill, up from $30.50 per cwt a year ago.