US launches Section 232 probe of auto imports

The US Commerce Department today launched an investigation into whether or not imports of automobiles and automotive parts threaten to impair US national security, setting the stage for a round of potential new tariffs.

The probe, which will include imports of SUVs, vans and light trucks, was initiated by commerce secretary Wilbur Ross following a conversation with US President Donald Trump.

Ross will consider whether or not the decline of US automobile and automotive parts production threatens to impair national security by weakening the US economy. The department will study the impact on research and development and related jobs for skilled workers in advanced vehicle technologies, including autonomous vehicles, fuel cells, electric motors, advanced manufacturing processes and other emerging technologies.

"There is evidence that, for decades, imports from abroad have eroded our domestic auto industry," Ross said.

US passenger vehicle imports have grown from 32pc of domestic vehicle sales to 48pc over the last 20 years, according to Commerce. From 1990 to 2017, employment in motor vehicle production declined by 22pc even as US consumers purchase automobiles at record levels, the department said.

Mexico and Canada were the largest exporters of new passenger vehicles to the US in 2017, potentially heightening the impact of the probe on the ongoing renegotiation of the North American Free Trade Agreement (Nafta).

Japan, Germany and South Korea were also among the five largest vehicle exporters to the US.

Commerce said it will announce a hearing date shortly and invite comments from industry and the public to assist in its investigation.

Commerce has 270 days from the initiation date to prepare a report providing recommendations for action based on the findings.

Commerce launched the investigation under Section 232 of the Trade Expansion Act of 1962, which authorizes the president to enact tariffs or quotas on products that impair or threaten to impair US national security. Subject imports may pose a direct threat domestic production necessary for national defense requirements or threaten the economic welfare of the country more broadly.

Trump in March imposed Section 232 tariffs on imported steel and aluminum following a year-long investigation by Commerce.