99 Percent of Comments Submitted Oppose 232 Tariffs on Automobiles and Parts

July 13th, 2018

Following a conversation with President Trump on May 23, 2018, Secretary of Commerce Wilbur Ross initiated an investigation under Section 232 of the Trade Expansion Act of 1962 to determine if imported automobiles and auto parts threaten national security. Interested parties were invited to submit comments or pertinent information to aid the investigation.

Over 2,200 individuals, businesses, trade associations, and international governments submitted commits in opposition. Only 24 of the comments supported an automobile tariff. Almost every major car manufacturer in the U.S. posted a comment on the docket opposing tariffs.

Each manufacturer and trade association that submitted a comment (or in most cases, a 15-page document) explained their significant contribution to the American economy and disclosed their strong opposition to the possibility of tariffs. Noteworthy comments are as follows:

Michelin supported comments made by other tire manufacturing companies about the negative impact of Section 232 tariffs:

“Imposing additional tariffs would negatively impact U.S. tire manufacturing operations and detrimentally impact revenues and productivity, as well as foreign direct investment that drives future growth, jobs and innovation of our business. In turn, the tariffs proposed could weaken the U.S. economy and national defense. For the above reasons, Michelin North America, Inc. strongly urges the Department of Commerce to exclude tire manufacturing from any such adjustments.”

General Motors noted that tariffs would be detrimental to both consumers and the company itself:

“The threat of additional tariffs on automobile imports could be detrimental to our company. At some point, this tariff impact will be felt by customers. Based on historical experience, if cost is passed on to the consumer via higher vehicle prices, demand for new vehicles could be impacted. Moreover, it is likely that some of the vehicles that will be hardest hit by tariff-driven price increases—in the thousands of dollars—are often purchased by customers who can least afford to absorb a higher vehicle price point. The correlation between a decline in vehicle sales in the United States and the negative impact on our workforce here, which, in turn threatens jobs in the supply base and surrounding communities, cannot be ignored. Alternatively, if prices are not increased and we opt to bear the burden of tariffs or plant moves, this could still lead to less investment, fewer jobs, and lower wages for our employees. The carry-on effect of less investment and a smaller workforce could delay breakthrough technologies and threaten U.S. leadership in the next generation of automotive technology.”

The Truck and Engine Manufacturers Association emphasized the significant impact that 232 tariffs will have on U.S.-based manufacturers:

“Automotive parts are key components in the manufacture of the goods produced by EMA’s members. In addition, those component-derived goods are sold into world-wide markets through complex global supply chains, and so necessarily compete with goods manufactured in multiple foreign locations. To the extent that U.S.-based manufacturers are compelled to pay more than their foreign competitors for necessary automotive parts, they will be at a significant and unfair competitive disadvantage from the outset.”

National Automobile Dealers Association submitted a 30-page document with recommendations for alternatives to tariffs:

“Certain Section 232 investigations resulting in “no action” recommendations reflected a recognition that tariffs and quotas are rarely the best option for the U.S. economy in general, or for American consumers specifically. Fortunately, there are plenty of tools in the federal government’s toolbox for use when addressing harmful trade imbalances, insufficient domestic production, and the chronically unfair trade practices of other nations.”

Toyota emphasized its contributions to the U.S. economy:

“From humble beginnings, Toyota has blossomed into a major U.S. employer and contributor to the manufacturing might of America, and become inextricably entwined in the cultural and economic fabric of the country… To that end, we strongly believe that Toyota plays an important role in promoting the country’s economic expansion, particularly when it comes to broadening and strengthening its manufacturing base. Imposing a 25 percent tariff on imported vehicles and auto parts, however, would only threaten to undermine these efforts — to the detriment of Toyota but also to the entire U.S. economy.”

BMW also stressed its contributions to the U.S. economy and the harm that tariffs will cause:

“The reason BMW has invested nearly $9 billion in our South Carolina plant, and has produced over 4 million vehicles at that plant since 1994 is not out of concern that BMW would be foreclosed from the U.S. market on account of restrictive U.S. trade policy. This investment was not even driven primarily by a need to ensure access to the U.S. market—as large and important as the U.S. market is. Rather, we have invested and continue to invest in the United States because it makes economic sense for us to do so. As a consequence of this investment, BMW directly and indirectly adds $6.3 billion annually to South Carolina’s economy and leads to the employment of 36,285 people there. The overall footprint in the U.S. is even larger, with value added by BMW of $15.77 billion and employment of 120,855 people.”

Volvo agreed:

“Volvo Cars strongly believes that imports of automobiles and auto parts do not pose a threat to the U.S. national security. Section 232 is intended to ensure that the U.S, military can obtain resources and products in a timely fashion. Importers of automobiles or automotive parts like Volvo Cars cannot reasonably be viewed as threatening U.S. national security.”

Subaru’s comment reflects the same sentiment:

“Our belief is that trade in autos and auto parts have consistently strengthened the U.S. economy. It has added jobs, economic activity, and investments that have been cornerstones in growing the U.S. economy. Given this track record of success, we urge you to find that auto trade strengthens, rather than weakens, U.S. national security. It is our view that there is no rational argument that can be presented to conclude otherwise.”

Honda reiterated its commitment to manufacturing in the United States while noting that its operations are not a national security risk:

“These are not abstract numbers. They tell the story of a company that has integrated itself into the U.S. economy through a strong commitment to localization and a welcoming trade environment. In every respect, Honda is a proud member of the U.S. auto industry…In exercising the power to impose protectionist tariffs under Section 232, the President should act with caution and restraint, and employ that authority when there is a true risk to our nation’s security. Imported vehicles and automotive parts are not a national or economic security threat.”

Other submissions included Mazda, Hyundai, Kai, Nissan, Jaguar, and others. Each comment indicated a passionate rejection of the threatened tariffs and a plea to consider the negative impacts of restricted trade.