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Amid Rumors of New Auto Duties, Grassley Vows Review of Presidential Tariff Authority

Monday, January 14, 2019
Sandler, Travis & Rosenberg Trade Report

The Senate Finance Committee will review the statutory authority President Trump has used to hike tariffs on imports of steel and aluminum products under the chairmanship of Sen. Charles Grassley, R-Iowa. Grassley laid out his plans amid reports that Trump could soon use that authority to increase import duties on automobiles and auto parts.

In May 2018 the Department of Commerce self-initiated an investigation under section 232 of the Trade Expansion Act of 1962 to determine whether imports of automobiles (including SUVs, vans, and light trucks) and auto parts are harming U.S. national security. A DOC press release explained that auto manufacturing has long been a significant source of U.S. technological innovation and that this 232 investigation would therefore consider whether the decline of domestic automobile and auto parts production threatens to weaken the internal economy of the U.S., including by potentially reducing research, development, and jobs for skilled workers in connected vehicle systems, autonomous vehicles, fuel cells, electric motors and storage, advanced manufacturing processes, and other cutting-edge technologies.

The DOC has until Feb. 17 to conclude its investigation and submit a report to the president, though it could do so earlier. If the report finds that excessive automobile and auto parts imports are a threat to U.S. national security, and the president concurs, the president has the authority to adjust imports, including through the use of tariffs and quotas. Any such actions would be imposed within 15 days of the president’s determination to act.

Inside US Trade reports that the latest draft of the DOC’s report includes three remedy options: a blanket tariff of 20-25 percent on all autos and auto parts; “narrowly tailored tariffs on automated, connected, electric and shared (ACES) vehicle technologies;” and a third possibility somewhere between those two. However, the article also quotes Commerce Secretary Wilbur Ross as saying “we’ve been through lots and lots of drafts” of the report and gives little indication of when the report might be issued or what its conclusions might be.

In the meantime, Grassley said he plans to review Trump’s use of the Section 232 authority, which served as the basis for the 25 percent additional tariff imposed on steel and the 10 percent additional tariff imposed on aluminum in early 2018. “While I strongly agree with President Trump that we must have fair trade deals that benefit Americans,” Grassley said in a document outlining the committee’s agenda for 2019, “I do not believe that we should alienate our allies with tariffs disguised as national security protections. And certainly not when it comes to trade in automobiles and auto parts.”

Grassley added that he is also “not fond” of the Section 301 additional tariffs Trump has imposed on hundreds of billions of dollars’ worth of imports from China but does “agree with the reasons they’ve been applied.” He indicated no intent to challenge the White House’s use of this authority and instead pledged to “continue to engage with the Administration … in hopes that negotiations will result in a change in China’s discriminatory policies and practices and an easing of tariffs and tensions.”

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