Trade Cases

Auto Tariffs Panned by Lawmakers and Industry

Written by Sandy Williams

The Trump administration’s announced Section 232 investigation into imports of automobiles and auto parts is not sitting well with lawmakers or automotive industry analysts. Some lawmakers are calling the suggestion that automotive imports are a threat to national security an abuse of executive branch authority.

Senate Finance Committee Chairman Orrin Hatch (R-UT) called the investigation “deeply misguided.”

“For most Americans, cars are the second largest purchase they make, after their homes. Taxing cars, trucks and auto parts coming into the country would directly hit American families who need a dependable vehicle, whether they choose a domestic or a global brand,” said Hatch in a statement.

“Instead of taking from the pocketbooks of hardworking Americans, I urge the administration to remain focused on addressing China’s trade practices and to work constructively with our trading partners to increase opportunities overseas for American businesses, farmers, ranchers and workers,” Hatch added.

Commerce Secretary Wilbur Ross has tied economic and military security together in defense of the investigation. “Economic security is military security, and without economic security you can’t have military security,” said Ross.

Sen. Bob Corker (R-TN), chairman of the Senate Foreign Relations Committee, called the Section 232 move by the Executive Branch a blatant abuse of trade authority. “There’s no rational person that could think we have a national security issue with auto manufacturing…,” said Corker. “Other countries can claim tariffs on whatever they deem. They can just claim it’s a national security issue. So, it’s a very dangerous, inappropriate path to go down.”

“The implementation of these tariffs would be a major blow to the entire automotive industry,” said Edmunds Manager of Industry Analysis Jeremy Acevedo. “The vast majority of manufacturers produce at least some models abroad, and the build-out of these production factories cannot easily or cheaply be moved across borders.”

In a statement last week, Toyota Motor Corp. said, “We believe free and fair trade is the best way to create sustained growth for the auto industry and provides more choices and greater value for American consumers.”

Toyota tweeted on May 25, “In America, Toyota has 10 plants, 136,000 employees & 1,500 dealers that contribute to their local economies. Tariffs on auto imports could hurt American jobs & raise consumer costs.” 

“This is a case where everybody gets hurt, and some get hurt less badly than others. It’s not like it’s just the Detroit Three versus everybody else. One of the most American cars that is sold here is the Toyota Camry,” said Kristin Dziczek, an industry and labor analyst for the Center for Automotive Research.

Volkswagen warned that automotive tariffs could hurt U.S. jobs and trigger a recession. “”One-sided protectionism has never helped anyone in the long term. Only free and fair trade secures increased prosperity,” a spokesman for the group based in Wolfsburg, Germany, told French news agency AFP.

“To treat auto imports like a national security threat would be a self-inflicted economic disaster for American consumers, dealers and dealership employees,” said Cody Lusk, president of the American International Automobile Dealers Association.

The United Autoworkers is one of the few voices in favor of potential automotive tariffs. During a media roundtable last week, UAW President Dennis Williams said he supports the Section 232 investigation and likes the idea of tariffs on imported cars. “I welcome the fact that they’re investigating this,” said Williams. “The American workers have been handed a short stick for a long time. I do think they ought to evaluate — are they dumping or saturating the market so that it’s a detriment to our industries? I think that’s important to us as a nation, important to our sovereignty. People are free traders to the detriment of our country.”

Commerce announced that June 22 is the due date for filing comments regarding the investigation, for requests to appear at the public hearing, and for submissions of a summary of expected testimony at the public hearing. Rebuttal comments are due by July 5 in response to comments filed on or before June 22. Public hearings will be held on July 19 and 20, 2018.

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