DOC Delivers Section 232 Report on Automotive Imports to Trump

Department of Commerce – February 17, 2019

Dear Valued Customer:

The Commerce Department has delivered on Sunday a long-awaited report to President Donald Trump that looked at whether foreign autos and auto parts pose a threat to national security.

Unlike the trade war with China, the president has focused on what he has called a potential threat to national security caused by automotive imports. That required him to seek an analysis by the Department of Commerce under Section 232 of the Trade Expansion Act. The agency had 270 days to complete the study and, after several delays, delivered its report to the White House two hours before the deadline. Trump has indicated that if the report backs up that conclusion, he may impose tariffs expected to run as high as 20 to 25 percent. Trump has up to 90 days to decide.

The Motor and Equipment Manufacturers Association (MEMA), a trade group representing a broad alliance of automotive companies, has called for the immediate release of the Section 232 tariff report and said in a statement that “If these tariffs are imposed, the first impacts will be felt by smaller suppliers. Usually North American-based, smaller supplier manufacturers’ two largest costs are raw materials/inputs and salaries. These suppliers are already paying significantly more for their raw materials due to tariffs on steel and aluminum. If Section 232 tariffs are implemented, suppliers will have no choice but to lay off members of their workforce.”

Toyota has warned that a Camry sedan assembled in Kentucky could jump in price by an average $1,600 and some Lexus models could jump by $5,000 or more if taxes of 25 percent were put on imported parts and components. These range from windshield wipers and batteries to engines and transmissions. A Mercedes-Benz S-Class produced in Germany would jump in price by $20,000 or more.

MEMA also said the impacts would be long-term and far reaching. Every single U.S.-made car and truck has imported components and assembly. Tariffs on autos and auto parts would affect every make and model sold in the U.S. and would result in higher prices for all vehicles. The average cost of a vehicle in the U.S. already exceeds $35,000.  But tariffs of the magnitude made possible by Section 232 tariffs on autos and auto parts will increase the cost of a vehicle by $7,000.

MEMA said its message to the White House remains clear: the cumulative effect of these tariffs– in addition to Sec. 232 tariffs on imported steel and aluminum and Sec. 301 tariffs on imports from China – will be devastating.

Billions of dollars of cars and automotive parts were covered by trade tariffs on China. Now, other trade partners including Germany and Japan could be in the cross-hairs. Trump has not yet indicated when he will publicly respond to the Commerce Dept. study.

Thank you for your attention and cooperation. If you have any questions, please contact your nearest JJB representative.

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