US Senators reintroduce a law that would delay the imposition of imported auto tariffs

Two United States senators Doug Jones (Democrat, Alabama) and Lamar Alexander (Republican Tennessee) have reportedly reintroduced the law that would delay the imposition of additional Section 232 tariffs on automobiles and automotive parts imported by the US.

On January 15, the senator said in a statement that The Automotive Jobs Act would require the International Trade Commission (ITC) to conduct a comprehensive study of the well-being, health, and vitality of the US automotive industry before tariffs could be applied.

“This bill would delay the administration’s proposed 25% tariff on automobiles and automotive parts imported into the United States until the president has a second opinion from the International Trade Commission about the effect those tariffs would have on the more than 7 million jobs in the American automotive industry,” Alexander said in the statement.

Jones said, “By having a deeper look at the state of the auto industry, an ITC study would shed light on the impacts that tariffs would have and would make it undeniably clear to the president that this industry is not a national security threat.”

In May 2018, President Donald Trump had directed the Commerce Department to initiate a Section 232 investigation to ensure whether imported automobiles, trucks and parts threaten the US national security or not. If so, the department was allowed to levy the tariffs.

The Commerce is expected to finish the investigation and report to the President next month. Until then, the tariffs on automobile and automotive parts imports cannot come to an effect.

Global automakers operating within the North American Free Trade Agreement (NAFTA) region believe that the potential Section 232 tariffs on automobiles and automotive parts imports may disrupt a highly integrated global supply chain.

US vehicle sales increasingly include a large number of cars that the country imports, representing 48 per cent in 2017 compared with 41 per cent in 2010, Congressional Research Service (CRS) said in a report in October.

The Centre for Automotive Research estimated that a 25 per cent tariff if applied to all vehicles sold domestically, could raise the price of an average car by US$4,400. The Peterson Institute for International Economics also estimated a similar price increase.

Under the legislation proposed by US senators, the International Trade Commission would require to assess many factors such as the number of automobiles assembled in the US, the percentage of imported automobile components used in those vehicles, the number of component parts for automobiles that are not produced in the US and thus, would not be available to domestic automotive producers if higher duties are imposed on the imports of those parts, and the effect of increasing automotive manufacturing costs on US jobs.