U.S. agency submits auto tariff probe report to White House

car plant
Are American car manufactures about to win big?

By David Lawder and David Shepardson

WASHINGTON, Feb 17 (Reuters) – The U.S. Commerce Department
sent a report on Sunday to U.S. President Donald Trump that
could unleash steep tariffs on imported cars and auto parts,
provoking a sharp backlash from the industry even before it is
unveiled, the agency confirmed.

Late on Sunday, a department spokeswoman said it would not
disclose any details of the “Section 232” national security
report submitted to Trump by Commerce Secretary Wilbur Ross. The
disclosure of the submission came less than two hours before the
end of a 270-day deadline.

Trump has 90 days to decide whether to act upon the
recommendations, which auto industry officials expect to include
at least some tariffs on fully assembled vehicles or on
technologies and components related to electric, automated,
connected and shared vehicles.

As the White House received the report, the industry
unleashed what is expected to be a massive lobbying campaign
against it.

The industry has warned that feared tariffs of up to 25
percent on millions of imported cars and parts would add
thousands of dollars to vehicle costs and potentially lead to
hundreds of thousands of job losses throughout the U.S. economy.

The Motor and Equipment Manufacturers Association, which
represents auto parts suppliers, warned that tariffs will shrink
investment in the United States at a time when the auto industry
is already reeling from declining sales, Trump’s tariffs on
steel and aluminum, and tariffs on auto parts from China.

“These tariffs, if applied, could move the development and
implementation of new automotive technologies offshore, leaving
America behind,” it said in a statement. “Not a single company
in the domestic auto industry requested this investigation.”

The Commerce Department started its investigation in May
2018 at Trump’s request. Known as a Section 232 investigation,
its purpose was to determine the effects of imports on national
security and it had to be completed by Sunday.

Automakers and parts suppliers are anticipating its
recommendation options will include broad tariffs of up to 20
percent to 25 percent on assembled cars and parts, or narrower
tariffs targeting components and technologies related to new
energy cars, autonomous, internet-connected and shared vehicles.

The Commerce Department alluded to a focus on emerging
vehicle technologies when it opened the investigation.

Administration officials have said tariff threats on autos
are a way to win concessions from Japan and the EU. Last year,
Trump agreed not to impose tariffs as long as talks with the two
trading partners were proceeding in a productive manner.

Trump said on Friday that tariffs protect industry and also
help win trade agreements.

“I love tariffs, but I also love them to negotiate,” he

A report from the Center for Automotive Research in Ann
Arbor, Michigan, published on Friday showed its worst-case
scenario of a tariff of 25 percent would cost 366,900 U.S. jobs
in the auto and related industries.

U.S. light duty vehicle prices would increase by $2,750 on
average, including U.S.-built vehicles, reducing annual U.S.
sales by 1.3 million units and forcing many consumers to the
used car market, the think tank’s report said.

Major automaker groups said last year the cumulative effect
for the United States would be an $83 billion annual price
increase and argued there was no evidence auto imports posed a
national security risk.

Canada and Mexico each won duty-free access to 2.6 million
vehicles as part of a new North American free trade deal even if
the administration moves ahead with the tariffs.
(Reporting by David Shepardson and David Lawder; Editing by
Clarence Fernandez)