This morning in metals news, the U.S. this week announced a new Section 232 probe investigating automotive imports, the specter of auto tariffs looms over Europe and Asia, and Mexico’s economy minister opines on the chances of a deal on the North American Free Trade Agreement (NAFTA) before the July Mexican presidential election.
Section 232 Redux
If you decided you had heard enough about Section 232, well, buckle up.
Earlier this week, the U.S. Department of Commerce announced it had launched, at the direction of President Trump, a new Section 232 probe of automotive imports. The statute is pursuant to the Trade Expansion Act of 1962, which the administration used to investigate aluminum and steel imports (on which the administration ultimately placed tariffs of 10% and 25%, respectively, in March).
“There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry,” Secretary of Commerce Wilbur Ross said in a release announcing the decision. “The Department of Commerce will conduct a thorough, fair, and transparent investigation into whether such imports are weakening our internal economy and may impair the national security.”
According to Commerce, in the last two decades the percentage of cars sold in the U.S. that were imported has risen from 32% to 48%.
Asia, Europe Eye Auto Tariff Probe
Naturally, foreign automotive manufacturers in Europe and Asia are not too happy about the news of another round of Section 232 coming their way.
The German president of the DIHK Chambers of Industries and Commerce criticized the move and the pretense of its invocation of national security, according to a Reuters report.
European automakers BMW, Daimler and Volkswagen all closed down on the heels of the news, while shares of Ford and General Motors were up, according to the report.
So You’re Telling Me There’s a Chance?
Every so often, officials involved in the NAFTA renegotiation talks will put a number to their thoughts on the feasibility of a deal being reached.
Today, Mexican Economy Minister Ildefonso Guajuardo said he saw a 40% chance of a deal before the July 1 presidential election in the country, according to Reuters.
NAFTA renegotiation talks began last fall, as the three countries have sought to update the trilateral trade deal first instituted in 1994.
Automotive content rules have been a major sticking point in the talks, with the U.S. advocating for stricter rules; it remains to be seen how this week’s announcement of a Section 232 probe of automotive imports will impact the tenor of NAFTA talks (particularly vis-a-vis rules of origin).