Andrey Kuzmin/Adobe Stack
The association representing Europe’s automotive manufacturers recently weighed in on the latest developments in the U.S.’s Section 232 automotive probe.
“Imports of cars and auto parts from the EU clearly do not pose a national security risk to the United States,” said Erik Jonnaert, secretary general of the European Automobile Manufacturers’ Association (ACEA). “Any trade restrictive measures in our sector will have a serious negative impact, not only on EU manufacturers but also on US manufacturers.”
On May 23, 2018, the Trump administration launched a Section 232 investigation into imports of automobiles and automotive parts. Section 232 of the Trade Expansion Act of 1962 is used to determine if certain imports are threats to U.S. national security. The Trump administration used Section 232 to impose tariffs on imported steel and aluminum last year.
Following the initiation of a Section 232 investigation, the U.S. secretary of commerce has 270 days by which to give the president a report with recommendations. The president then has 90 days to decide what to do with the findings, if anything.
Secretary of Commerce Wilbur Ross sent President Donald Trump his Section 232 auto report Sunday, Feb. 17, just hours before the deadline.
Unsurprisingly, European automakers are concerned at the prospect of new U.S. tariffs on imported automobiles. In its prepared statement, ACEA also posited the tariffs would have a deleterious effect on the U.S. economy.
“ACEA cautions that the application of additional duties on imports of passenger cars and parts would not only severely affect the EU industry, but also the US economy and consumers alike,” ACEA said in the release. “It would mean that all automobile manufacturers in the United States, whether domestic or international, would face a significant increase in costs.
“This cost increase would have to be mitigated by lowering margins, reducing production costs or passing additional purchase and repair costs on to consumers. Such measures would make American automobile manufacturing less competitive and hit US consumers in their pockets. In other words, the imposition of tariffs would have a counter-productive effect on the US economy.”
While the ongoing trade negotiations between the U.S. and China dominate much of the headlines, the U.S. and the E.U. are working through trade differences, too. For example, the U.S.’s Section 232 tariffs on steel and aluminum remain in effect for the trading bloc.
With the 90-day Section 232 window underway for Trump, the clock is ticking. According to Reuters, European ministers on Friday debated when to begin trade negotiations with the U.S.
According to media reports last week, European Commission President Jean-Claude Juncker said Trump had promised him he would hold off on imposing automotive tariffs. However, Juncker added that if the U.S. went forward with the tariffs, the E.U. would retaliate in kind.
Currently, the E.U. has a 10% tariffs on imported U.S.-made vehicles, while the U.S. tariff on E.U.-made cars is 2.5%.