Industry News

Possible Auto Tariffs Delayed

Possible Auto Tariffs Delayed

Ongoing Trade Talks to Continue

The United States has been in ongoing trade negotiations with both the European Union and Japan, while also entertaining a back and forth “trade war” with China.  Trade talks with China will most likely resume in late June and ongoing discussions with the European Union and Japan will remain on the table with possible thanks to President Trump’s recent announcement.

Possible Auto Tariffs Delayed

On May 17, 2019, President Trump announced that he would delay a possible increase on auto tariffs for six months. The delayed decision is based on possible import tariffs of automobiles and auto parts triggered by another “investigation under section 232 of the Trade Expansion Act of 1962. The investigation will attempt to determine whether foreign-made automobiles (sedans, sport utility vehicles, crossover utility vehicles, minivans, cargo vans, and light trucks) and auto parts (engines and engine parts, transmissions and powertrain parts, and electrical components) are being imported in such quantities or under such circumstances as to threaten or impair U.S. national security,” according to Sandler, Travis and Rosenberg.

 

Background

Sandler, Travis, and Rosenberg also states:

“According to the proclamation, the DOC determined that U.S.-owned auto producers’ share of the domestic and global markets has fallen sharply in recent decades, which decreases the sales revenues that enable the research and development expenditures necessary for long-term automotive technological superiority, which in turn is essential for national defense.

Under U.S. law the president has authority to adjust imports in response to such a finding, including through the use of tariffs and quotas, and President Trump has threatened tariffs of up to 25 percent. However, for the time being the president has concurred with a DOC recommendation to seek agreements with other countries that address the national security threat. (The proclamation indicates that the DOC recommended other actions as well but does not say what they were.)”

Europe is the second largest export economy in the world, with cars and automotive parts being the largest export. Japan was the United States’ 4th largest goods export market in 2018.

The American Journal of Transportation states that Trump advisers have warned him that placing a tariff on cars and car parts could create major push back from Congress and legislation has looked to limit the President’s ability to impose tariffs.

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