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01 March 2019
On 17 February 2019 the Department of Commerce released the following comment:
Today, Secretary of Commerce Wilbur Ross formally submitted to President Donald J. Trump the results of the Department of Commerce's investigation into the effect of imports of automobiles and automobile parts on the national security of the United States.
With this one sentence, the global automotive industry was put on high alert of a potential new US import tariff aimed directly at the products that they sell.
On 23 May 2018, on the White House's request, the Department of Commerce initiated an investigation into whether the import of vehicles and parts presents a national security risk to the US economy. On 17 February 2019, within hours of its 270-day deadline, the department concluded its analysis and formally sent its findings to President Trump.
By statute, the president will have 90 days to decide whether to:
His decision could be made immediately or at the last hour. However, if the president decides a new tariff is necessary under Section 232 of the Trade Expansion Act 1962, automotive executives – from suppliers to producers and assemblers – will face new decisions and calculations; and will have to make these changes quickly.
If the past is any indicator, the recent Section 232 tariffs on steel and aluminium imports could shed some light on what to expect and when (for further details please see "Section 232 adjustments on US steel and aluminium imports").
In those cases, the president did not take the full 90 days to make his decision. The commerce secretary sent the investigation report on 11 January 2018, the president concurred in an 8 March 2018 proclamation and double-digit tariffs were imposed beginning on 23 March 2018.
Equally notable is that similar to the Department of Commerce's approach to steel and aluminium imports, the Section 232 report on automotive tariffs was not released immediately.
Decisions and questions with long-term effects will have to be contemplated – for instance:
These are clearly troubling times for the automotive industry. To that end, automotive executives need to know how their products, plants, customers and suppliers are vulnerable to this latest action and other fast-paced developments, including the pending ratification of the United States-Mexico-Canada Agreement (for further details see "We have a deal! USTR publishes US-Mexico-Canada Agreement slated to replace NAFTA"), continuing Section 232 tariffs on steel and aluminium imports and Section 301 tariffs on imports from China (for further details see "Section 301 update: List 3 exclusion process halted, while delays expected on List 1 and 2 exclusion reviews").
For further information on this topic please contact David R Hamill or Birgit Matthiesen at Arent Fox LLP by telephone (+1 202 857 6000) or email (email@example.com or firstname.lastname@example.org). The Arent Fox LLP website can be accessed at www.arentfox.com.
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