Not long after President Trump announced that the U.S. would impose tariffs on steel and aluminum, the Department of Commerce launched an investigation that may lead to additional duties on imported vehicles and automotive parts. Effective, the Department will now examine whether imports of vehicles and auto parts threaten U.S. national security.

The Department issued a statement saying, “During the past 20 years, imports of passenger vehicles have grown from 32 percent of cars sold in the United States to 48 percent. From 1990 to 2017, employment in motor vehicle production declined by 22 percent, even though Americans are continuing to purchase automobiles at record levels. Now, American owned vehicle manufacturers in the United States account for only 20 percent of global research and development in the automobile sector, and American auto part manufacturers account for only 7 percent in that industry.”

The probe will likely affect all U.S. automobile manufacturers and parts suppliers that use imported parts or that import cars, trucks and SUVs into the U.S.

Section 232 of the Trade Expansion Act of 1962 allows the executive branch to conduct investigations to “determine the effects on the national security of imports.” Within 270 days of initiation, the Commerce Department issues a report to the President with the investigation’s findings, indicating whether certain imports threaten to impair America’s national security. Then, the President has 90 days to determine whether to “adjust the imports” through tariffs or quotas.

This investigation will focus on whether the decline of domestic automobile and automotive parts production threatens to weaken the U.S. economy by potentially reducing research, development, and jobs for skilled workers in connected vehicle systems, autonomous vehicles, fuel cells, electric motors and storage, advanced manufacturing processes, and other cutting-edge technologies.

Critics of the decision warn that restricting trade will inevitably lead to fewer options and higher prices for American purchasers. Meanwhile, this investigation continues to fuel the Administration’s confrontational trade approach that has agitated relations with both allies and rivals.

The Department will publish a notice in the Federal Register on May 30, 2018, announcing a hearing date and inviting comments from industry and the public to assist in the investigation. This is the only time interested parties will be able to present opinions, data, information, or advice on the matter. The deadlines are as follows:

• Written Comments – June 22
• Request to Testify – June 22
• Rebuttal comments – July 6
• Public Hearing – July 19-20 (8:30-5:00 each day, in D.C.)

If you have questions about the information in this alert, please contact William Kohler (313-568-6603 or [email protected]) or Dommond Lonnie (213-457-1712 or [email protected]).