Strong opposition from the US automotive industry facing potential tariffs of 25% being imposed by US Government on automobiles and automotive parts
On 19th July, the US Department of Commerce is holding its hearing to determine whether imported automobiles and automotive parts actually pose a national security threat and should therefore be subject to tariffs of up to 25 percent.
The automotive supplier industry, in the US led by MEMA, has been strongly opposing this measure, launching a campaign which counter-argues the proposal (link) .Together with more than 55 other US trade associations, they are calling for greater congressional oversight of U.S. trade policies, releasing an open letter to President Donald Trump not to impose higher import tariffs on automobiles and parts. The coalition highlights in the letter (link) how such an increase in tariffs would affect consumers significantly, leading to a decline in sales and job losses, furthermore, it would have an indirect effect as consumers delay critical vehicle maintenance.
CLEPA filed its comments in a letter to the U.S. Department of Commerce on 29th June fervently arguing against the imposition of tariffs, bringing evidence to show the hugely detrimental economic effects such measures would bring , for both the American and European automotive supply industry, alike. CLEPA members strongly oppose the imposition of tariffs, due to the fact that they will unequivocally greatly inhibit future business opportunities, which for some companies may precipitate a move in production outside of the U.S. clearly decreasing their U.S. manufacturing employment level, with significant job losses.
There is a deep-seated fear in the automotive industry about U.S. Trump Administration already having predetermined the outcome of the investigation.
Following the hearing, the U.S. Secretary of Commerce will report its findings and recommendations to the U.S. President. The release of the US Department of Commerce’s report is now expected at the end of August.
If the findings are negative, no further action is required. If the findings are affirmative, the process will proceed for another 90 days, during which time the U.S. President shall decide whether to accept the findings and recommendations. A further 15 days will follow for implementation of actions (if any). Lastly, the President will duly inform Congress.
Some figures about EU automotive suppliers:
- CLEPA 15 largest companies employ a total of c.a. 280,000 personnel in the U.S.
- EU Automotive suppliers generate a high concentration of patent applications and grants in the U.S., with some holding over 60% of their Intellectual Property only in the U.S.
- EU companies investments in manufacturing facilities across the U.S. range from c.a. $2m to $470 million. Development expenses may be around $35m for a company.
- Some companies purchase over $1 billion of direct materials from 700 U.S.-based suppliers.
- projected cost impacts from additional US import duties: ranging from $5 million to at least $75 million.
In: CLEPA News, Growth & Competitiveness, Trade