Section 232 hearing on automobile and automotive parts imports opened yesterday
Report shows tariffs would hurt domestic production and cost jobs
The United States Department of Commerce yesterday began its open hearing on its Section 232 investigation of automobiles and auto parts. The investigation is considering whether imports of vehicles and parts pose a threat to national security.
President Donald Trump is reportedly considering raising US duties on all imports of automobiles—including SUVs, vans, and trucks—and auto parts to 25 percent. He has already invoked the same national security law recently to slap tariffs on steel and aluminum imports.
Meanwhile a recent report from the Peterson Institute for International Economics concluded that tariffs on the automotive industry would hurt domestic production and cost the economy jobs.
“It is too early now to say if this investigation will ultimately result in Section 232 recommendations on national security grounds,” said Commerce Secretary Wilbur Ross, in his opening remarks at the hearing. “The department did recommend action in our investigations of steel and aluminum imports, but each industry is different.”
Section 232 of the Trade Expansion Act of 1962 authorizes the president to “recognize the close relations of the economic welfare of our Nation to our national security,” and “to take into consideration the impact of foreign competition on the economic welfare of individual domestic industries.”
“The automobile industry continues to drive American innovation,” said Ross. “It supports millions of Americans with high-paying jobs. And the industry is central to the advancement of new technologies such as autonomous vehicles, fuel cells, electric motors, battery storage, composites and materials, advanced manufacturing processes, and many other leading-edge technologies that have a direct bearing on national security.”
The focus of the hearing, Ross added, “is to gather information on the current strength of the domestic industry.” “We are interested in hearing about the global market and technology trends,” he asserted, “that are important to our assessment as to whether government action is required to assure the viability of US domestic production.”
The PIIE report, however, concluded that “auto tariffs would throw US automakers and workers under the bus.” The analysis showed that, assuming there would be no exemptions for any country, imposing tariffs at the 25-percent level would cut production in the auto and auto parts industries would by 1.5 percent and cause 195,000 US workers to lose their jobs within one to three years.
If the US faced retaliation from other countries as a result, US production would fall four percent and 624,000 US jobs would be lost, resulting in the displacement of five percent of the workforce in the auto and parts industries.
“This second scenario would also hurt US exports of these products more than imports,” the report concluded.
The Department of Commerce’s findings and recommendations in the Section 232 investigation are due by mid-February 2019.
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