Automakers and consumers fearing a new U.S. tariff on imported automobiles and automotive parts breathed a sigh of relief on Friday when President Donald Trump announced he would delay his decision on the matter for up to six months.
Need buying strategies for steel? Request your two-month free trial of MetalMiner’s Outlook
The U.S. Department of Commerce launched a Section 232 investigation related to imports of automobiles and automotive parts in May 2018. Commerce Secretary Wilbur Ross submitted a report to the president in February, beginning the 90-day period by which the period is required to make a decision.
However, a day before the May 18 deadline, the president announced he would delay the decision and issued a proclamation directing United States Trade Representative Robert Lighthizer to begin a negotiation period with the European Union, Japan and “any other country the Trade Representative deems appropriate.”
“United States defense and military superiority depend on the competitiveness of our automobile industry and the research and development that industry generates,” the White House said. “The negotiation process will be led by United States Trade Representative Robert Lighthizer and, if agreements are not reached within 180 days, the President will determine whether and what further action needs to be taken.”
The investigation, like the probe of steel and aluminum imports, is predicated on determining whether the import levels constitute a threat to U.S. national security. The aforementioned proclamation notes domestic auto producers’ market share has fallen from 67% in 1985 to 22% in 2017, and that the volume of imports doubled during that period.
Senate Finance Committee Chairman Chuck Grassley, R-Iowa, welcomed the delay in the tariffs.
“I’m glad President Trump decided to delay these tariffs,” Grassley said in a prepared statement. “As the president knows, I’m not a fan of tariffs. And I have serious questions about the legitimacy of using national security as a basis to impose tariffs on cars and car parts.
“I’ll continue to strongly support the Trump administration’s pursuit of trade negotiations with the European Union and Japan. I encourage Ambassador Lighthizer to pursue comprehensive trade agreements that benefit all Americans, including farmers, manufacturers and service providers.
MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel
“In the meantime, I’m continuing to work on bipartisan legislation to update Section 232 to give Congress, which has constitutional authority to regulate international commerce, a meaningful role in the process.”