This sounds distressingly familiar. The Commerce Department has commenced an investigation, under Section 232 of the Trade Expansion Act of 1962, of whether imports of automobiles (passenger cars, SUVs, vans and light trucks) and automotive parts “threaten to impair the national security”. Section 232 is the same authority underlying the recent imposition of additional tariffs on steel and aluminum imports.
This one will move on a short fuse. The investigation schedule requires submission of comments by June 22, 2018 and rebuttal comments by July 6, 2018. A public hearing will be held in Washington, DC on July 19 and 20, 2018. Requests to appear at the hearing must be submitted no later than June 22.
Commerce is particularly interested in receiving comments on the following points:
- The quantity and nature of imports of automobiles, including cars, SUVs, vans and light trucks, and automotive parts and other circumstances related to the importation of automobiles and automotive parts;
- Domestic production needed for projected national defense requirements;
- Domestic production and productive capacity needed for automobiles and automotive parts to meet projected national defense requirements;
- The existing and anticipated availability of human resources, products, raw materials, production equipment, and facilities to produce automobiles and automotive parts;
- The growth requirements of the automobiles and automotive parts industry to meet national defense requirements and/or requirements to assure such growth, particularly with respect to investment and research and development;
- The impact of foreign competition on the economic welfare of the U.S. automobiles and automotive parts industry;
- The displacement of any domestic automobiles and automotive parts causing substantial unemployment, decrease in the revenues of government, loss of investment or specialized skills and productive capacity, or other serious effects;
- Relevant factors that are causing or will cause a weakening of our national economy;
- The extent to which innovation in new automotive technologies is necessary to meet projected national defense requirements;
- Whether and, if so, how the analysis of the above factors changes when U.S. production by majority U.S.-owned firms is considered separately from U.S. production by majority foreign-owned firms; and
- Any other relevant factors.
The scope of this investigation is huge. I’m not sure whether there’s a preordained outcome, but it would behoove parties involved in automotive trade to participate in the investigation and demonstrate why their products should not be subject to restrictive measures under Section 232.