GM Says Section 232 Auto Tariffs Would Harm Its Competitiveness

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The U.S. Department of Commerce. qingwa/Adobe Stock

The Trump administration’s Department of Commerce announced in May that it would be using Section 232 once again, this time to investigate imports of automobiles and automotive components.

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Secretary of Commerce Wilbur Ross testified before the Senate Finance Committee on June 20, a hearing during which he was asked about the Trump administration’s trade policies, both enacted and proposed.

Members of the committee could not get much in terms of specifics out of Ross with respect to the relatively fresh Section 232 auto probe. Ross said it was still too early in the investigation to make definitive statements about tariffs (or anything else related to the case).

Of course, that does not mean that industry groups and brands aren’t lining up to share their opinions.

The Department of Commerce extended the deadline for public comments on the issue by one week, giving those interested until Friday, June 29 to submit their comments (public hearings are scheduled for July 19-20).

By Friday afternoon, over 2,100 comments had been submitted.

In a comment filed Friday, General Motors decried the negative impacts it argues broad tariffs would have on the company and its global status.

“If import tariffs on automobiles are not tailored to specifically advance the objectives of the economic and national security goals of the United States, increased import tariffs could lead to a smaller GM, a reduced presence at home and abroad for this iconic American company, and risk less—not more—U.S. jobs,” GM’s comment reads. “The threat of steep tariffs on vehicle and auto component imports risks undermining GM’s competitiveness against foreign auto producers by erecting broad brush trade barriers that increase our global costs, remove a key means of competing with manufacturers in lower-wage countries, and promote a trade environment in which we could be retaliated against in other markets.”

In addition, GM warned of the impact on the consumer, particularly when considered in tandem with the Section 232 steel and aluminum duties, plus the duties on Chinese goods related to the Section 301 investigation (the first round of tariffs worth $34 billion is scheduled to go into effect July 6).

“At some point, this tariff impact will be felt by customers,” the GM comment states. “Based on historical experience, if cost is passed on to the consumer via higher vehicle prices, demand for new vehicles could be impacted. Moreover, it is likely that some of the vehicles that will be hardest hit by tariff-driven price increases—in the thousands of dollars—are often purchased by customers who can least afford to absorb a higher vehicle price point. The correlation between a decline in vehicle sales in the United States and the negative impact on our workforce here, which, in turn threatens jobs in the supply base and surrounding communities, cannot be ignored.”

GM’s full comment — in addition to the thousands of other comments — can be viewed by visiting regulations.gov and searching DOC-2018-0002-0001.

Other automakers submitting comments included Toyota, Mitsubishi and Volvo.

“Volvo Cars strongly believes that imports of automobiles and auto parts do not pose a threat to the U.S. national security,” Volvo’s comment said. “Section 232 is intended to ensure that the U.S, military can obtain resources and products in a timely fashion. Importers of automobiles or automotive parts like Volvo Cars cannot reasonably be viewed as threatening U.S. national security.”

OFII Says Auto Probe is ‘Misguided and Unnecessary’

The Organization for International Investment (OFII) on Friday released its letter to the administration, in which it criticized the idea of auto tariffs against key allies and challenged the notion that international automakers’ products pose a threat to the U.S.’s national security.

“The Department’s Section 232 investigation into whether, ‘imports of automobiles, including SUVs, vans and light trucks, and automotive parts into the United States threaten to impair [U.S.] national security,’ is misguided and unnecessary,” OFII’s formal comment to the Department of Commerce reads.

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OFII represents international business subsidiaries headquartered outside the U.S.

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