An Analysis of the United States’ Automotive Tariff Threat
On 23 May 2018, Secretary of the United States Commerce Department Wilbur Ross launched a Section 232 investigation as to whether automotive imports are hurting US national security. Initial reports indicate that the President of the United States, Donald Trump, is pursuing tariffs upwards of 25% on cars, SUVs, vans, light trucks and automotive parts.
Section 232 of the Trade Expansion Act of 1962 allows the US President to adjust the imports of goods and products if it is found that the situation or circumstance surrounding said imports threatens national security. Recently, Section 232 has been receiving a barrage of international attention following the United States’ implementation of steel and aluminium tariffs at 25% and 10% respectively. This legislation has been sparingly used in the past. Crude oil was investigated in 1999 and iron ore was investigated in 2001. In both cases, the commerce department did not recommend a change in import duties.
This trade brief provides an overview and analysis of the United States’ automotive tariff threat. It introduces the threat and assesses the potential magnitude and impact by examining US Chapter 87 imports. It then puts the proposed tariff in a global context by specifically looking at African automotive exports. It concludes by considering the US administration’s approach to trade, including recent history on steel and aluminium tariffs, to address the question: Will they or won’t they impose the auto tariff?
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