Industry News: U.S. Announces A New Probe Into Car Imports

[William Maley]

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Automakers already have enough of a headache with the current administration in the white house, but news that broke today is only going to make it even worse.

Wilbur Ross, the U.S. Secretary of Commerce has announced that President Donald ordered 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 automotive parts into the United States threaten to impair the national security."

"There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry. The Department of Commerce will conduct a thorough, fair and transparent investigation into whether such imports are weakening our internal economy," said Ross in a statement.

There's also this interesting bit in the statement,

Quote

During the past 20 years, imports of passenger vehicles have grown from 32 percent of cars sold in the United States to 48 percent. From 1990 to 2017, employment in motor vehicle production declined by 22 percent, even though Americans are continuing to purchase automobiles at record levels.  Now, American owned vehicle manufacturers in the United States account for only 20 percent of global research and development in the automobile sector, and American auto part manufacturers account for only 7 percent in that industry.  

 

The Wall Street Journal reported yesterday that tariffs as high as 25 percent could be slapped on new cars. Currently, the tariff on imported vehicles is at 2.5 percent. Imported trucks are already hit with a 25 percent tariff via the chicken tax.

There are a couple likely reasons for this investigation,

• Mid-term elections are coming up and this is seen as a way to court voters in the heartland with the promise of bringing back jobs to the U.S.
• Possibly being used as leverage in negotiations with Canada and Mexico over the North American Free Trade Agreement (NAFTA); the European Union, and China.

This investigation could hurt Mexico the most as they are the largest source of U.S. auto imports - delivering just under $50 billion of imports last year. As for automakers, Bloomberg reports that Jaguar Land Rover, Mazda, and Mitsubishi would be the most affected as all of their vehicles are imported. The news sent the stock prices of foreign automakers downward. Shares in Mazda dropped 5.2 percent at the close of trade in Japan, while Daimler and BMW saw their stock price drop more than two percent.

This announcement has gotten condemnation from various governments, trade groups, analysts, and automakers. Here are just a few.

"China opposes the abuse of national security clauses, which will seriously damage multilateral trade systems and disrupt normal international trade order," said Gao Feng, spokesman at the Ministry of Commerce in China during a regular press briefing.

"We will closely monitor the situation under the U.S. probe and fully evaluate the possible impact and resolutely defend our own legitimate interests."

“We have to consider this as something of a provocation. I have the growing impression that the U.S. no longer believes in the competition of ideas, but only the law of power. It fills me with grave concern,” said Eric Schweitzer, president of the Association of German Chambers of Commerce and Industry.

“The U.S. auto industry is thriving and growing. To our knowledge, no one is asking for this protection. This path leads inevitably to fewer choices and higher prices for cars and trucks in America,” said  John Bozzella, CEO of the Association of Global Automakers, a trade group that represents Hyundai, Nissan, Toyota, and others.

Source: Automotive News (Subscription Required), Bloomberg, Reuters, Wall Street Journal (Subscription Required), U.S. Department of Commerce

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U.S. Department of Commerce Initiates Section 232 Investigation into Auto Imports

Today, following a conversation with President Donald J. Trump,  U.S. Secretary of Commerce Wilbur Ross initiated an investigation under Section 232 of the Trade Expansion Act of 1962, as amended.  The investigation will determine whether imports of automobiles, including SUVs, vans and light trucks, and automotive parts into the United States threaten to impair the national security as defined in Section 232.  Secretary Ross sent a letter to Secretary of Defense James Mattis informing him of the investigation.

“There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry,” said Secretary Ross. “The Department of Commerce will conduct a thorough, fair, and transparent investigation into whether such imports are weakening our internal economy and may impair the national security.” 

During the past 20 years, imports of passenger vehicles have grown from 32 percent of cars sold in the United States to 48 percent.   From 1990 to 2017, employment in motor vehicle production declined by 22 percent, even though Americans are continuing to purchase automobiles at record levels.  Now, American owned vehicle manufacturers in the United States account for only 20 percent of global research and development in the automobile sector, and American auto part manufacturers account for only 7 percent in that industry.  

Automobile manufacturing has long been a significant source of American technological innovation. This investigation will consider whether the decline of domestic automobile and automotive parts production threatens to weaken the internal economy of the United States, 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.  

Following today’s announcement, the Department of Commerce will investigate these and other issues to determine whether imports of automobiles and automotive parts threaten to impair the national security.  A notice will be published shortly in the Federal Register announcing a hearing date and inviting comment from industry and the public to assist in the investigation.

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[Drew Dowdell]

It would be difficult for him to get around the NAFTA agreement for now, but I think this is largely directed at China and Europe anyway.

The Chinese want into this country sooooo bad. 

[Suaviloquent]

Well there was a great piece I read somewhere that the Chicken Tax is what keeps domestic truck lines safe from competition.

 

but then look at Japan and Korea. American makes can never succeed there. And that’s because they are not even willing to try to understand. Look at China. How the hell will anyone believe that their automakers need any protections any more with the kinds of cars they make today.

 

I don’t like Trump, don’t like Wilbur Ross, and a lot of what the domestic makes even make is partially or wholly imported.

 

but really the question is that autos are a big reasons hoomaans are doomed with global warming, and so tariffs might just do nothing to change that, and that’s what LeTrump wants.

[balthazar]

what.

[smk4565]

Foreigners aren’t taking auto jobs, robots are.

Also the Camry is the most American car, a lot of “domestic” cars are made in Mexico or Canada so who does this hurt besides the consumer that will get hit with higher prices?

And if you tariff all these cars and sales drop, profits drop, etc these car companies will just make more cuts.  

Mid you really want to boost American jobs, manufacturing and wages put a 90% income tax on corporate profits over $5 billion, then all of a sudden these companies will pay higher wages and invest back into the company rather than try to post record profits to inflate their stock price.  

[balthazar]

Only way a Camry is an American car is if the tooling & rights are sold to an American company. But tell yourself whatever you need to.

[G. David Felt]

Potus 45 could start truly representing Americans by dumping his Rolls and buying and driving american auto's, supporting American companies in many ways that he does not do so now and stop this stupid tax everyone BS.

[riviera74]

2 hours ago, dfelt said:

Potus 45 could start truly representing Americans by dumping his Rolls and buying and driving american auto's, supporting American companies in many ways that he does not do so now and stop this stupid tax everyone BS.

You know he would never do something so sensible.

Moreover, a lot of foreign-made cars sell here because people want to buy them.  Not all domestic-branded cars are made in North America (e.g. Buick Envision).  Not all foreign-branded cars are made overseas (e.g. BMW X3 and X5) Somebody needs to tell POTUS that this is not 1970 anymore.  A lot has changed and baby boomer buying habits did that over the last 45 years.

[smk4565]

3 hours ago, balthazar said:

Only way a Camry is an American car is if the tooling & rights are sold to an American company. But tell yourself whatever you need to.

It is made in America with 78% American made parts. 

GM made over 300,000 pickups (all crew cabs) in Mexico last year, Ram made 246,000, Ford Fusion and Lincoln MKZ are made there too.  So if this goes through, the tariff goes on the Silverado, Sierra and Ram, but not the Camry, Pilot, Ridgeline, Sienna, etc. Nissan builds a lot in Mexico also, so really this move against NAFTA production just hurts the Detroit 3.  Even if the tariff hits the S-class and Porsche 911, the people buying those won't care, they have crazy money anyway.  25% tariff on a Ram or Silverado makes that $40k truck a $50k truck, and the Toyota Tundra is American made, go ahead and give a $10,000 price advantage, that really helps American business.

22 minutes ago, riviera74 said:

You know he would never do something so sensible.

Moreover, a lot of foreign-made cars sell here because people want to buy them.  Not all domestic-branded cars are made in North America (e.g. Buick Envision).  Not all foreign-branded cars are made overseas (e.g. BMW X3 and X5) Somebody needs to tell POTUS that this is not 1970 anymore.  A lot has changed and baby boomer buying habits did that over the last 45 years.

That is true, people like a lot of the imported cars, they have good performance cars, good luxury cars, most of the Japanese brand cars are made in the USA anyway.

Will there be a tax on ties and dress shirts made in China?

[balthazar]

So when people say 'American cars are not competitive / horrible!' they're talking about mercedes, bmws and toyodas???

The only way a vehicle tax can work is based on the parent company, not where in 60 minutes a bunch of parts are screwed together.

[daves87rs]

No matter which way we look at it, it is simply a bad idea....

[ccap41]

No worries, guys. He'll be carted around in a Caddy, like he has been. 

http://www.foxnews.com/auto/2018/04/12/exclusive-trumps-new-presidential-limousine-with-secret-service-set-to-transport-president-this-summer.html

 

[G. David Felt]

2 hours ago, ccap41 said:

No worries, guys. He'll be carted around in a Caddy, like he has been. 

http://www.foxnews.com/auto/2018/04/12/exclusive-trumps-new-presidential-limousine-with-secret-service-set-to-transport-president-this-summer.html

 

Tax payers paid for it, I want him to dump his Euro Trash cars and buy American. After all, he does run on the phrase

"Making America Great Again!"

Though his actions are anything but.

Back on Topic, I agree with Drew that as long as NAFTA is in effect, this is mostly aimed at the Chinese who are wanting to get into our market to try and dominate it.

[ccap41]

That's just a douchey thing to ask of somebody. I'd wager most, if not all, of his cars purchased by himself were bought before he because the President. 

US makes absolutely nothing to even compete with a Rolls. Make America Great by making something even half as luxurious and dominant as a Rolls. Rolls Royce probably doesn't even know who Cadillac and Lincoln even are. 

[G. David Felt]

22 minutes ago, ccap41 said:

That's just a douchey thing to ask of somebody. I'd wager most, if not all, of his cars purchased by himself were bought before he because the President. 

US makes absolutely nothing to even compete with a Rolls. Make America Great by making something even half as luxurious and dominant as a Rolls. Rolls Royce probably doesn't even know who Cadillac and Lincoln even are. 

Missing the Point my Friend, if your running on a platform of Making America Great Again, and you speak about bringing back jobs, restarting the coal industry, building up American manufacturing, Steel, etc. then walk the walk. 

He should be like Warren Buffett and buying American products including cars. Warren who I do highly admire and respect drives Cadillac and has stated he could buy many times over European luxury auto's, but as one that believes in America, he supports everywhere he can American companies.

• Trump Net Worth = $3.5 Billion
• Warren Net Worth = $87.5 Billion

Which business man are you more inclined to follow? One who truly puts his cash where his mouth is at or one that says one thing and does another.

That is the point I am trying to make.

Potus as the leader of the free world currently should be leading by example of what he wants to attain.

Starting a probe into what he believes is hurting American Manufacturing should also be led by examples of where he spends his money.

[ccap41]

So sell what he already has? Because that makes sense. 

I'll buy everything Warren Buffet buys so I become a billionaire too!! 

[Drew Dowdell]

1 hour ago, ccap41 said:

So sell what he already has? Because that makes sense. 

I'll buy everything Warren Buffet buys so I become a billionaire too!! 

I actually did some of that... picking up stocks that Warren buys.

 

Anyway, I see no issue with Trump being a Rolls fan... he can like what he likes and I'm certainly not going to argue with that.  If I were to become President, would people give me crap for continuing to own a car from a brand that no longer exists?

The tariff is incredibly short-sighted though.  "All-American" Buick is anything but.... Only 2/5ths of its lineup are built in the US.

Encore - Korea

Regal - Germany

Envision - China

Cascada - Poland

Enclave - U.S.

Lacrosse - U.S.

Toyota?

Corolla - Canada

Camry - U.S.

Avalon - U.S.

RAV4 - Canada

Highlander - US

Tundra - US

Prius - US

Hyundai and Honda are much the same.

And again, he's not going to get around NAFTA for the Canadian and Mexican built vehicles. This is targeted at EU, Japan, Korea, and Germany.

 

[ccap41]

6 minutes ago, Drew Dowdell said:

I actually did some of that... picking up stocks that Warren buys.

 

Anyway, I see no issue with Trump being a Rolls fan... he can like what he likes and I'm certainly not going to argue with that.  If I were to become President, would people give me crap for continuing to own a car from a brand that no longer exists?

Oh no, I completely agree on the financial investing part of that. Warren knows what the heck he is doing. 

I don't think somebody should be held "hostage" for buying something foreign prior to being elected but I do think while in office you should only buy American. If nothing else, it is one less thing for people to complain about for X years. 

[Drew Dowdell]

3 minutes ago, ccap41 said:

Oh no, I completely agree on the financial investing part of that. Warren knows what the heck he is doing. 

I don't think somebody should be held "hostage" for buying something foreign prior to being elected but I do think while in office you should only buy American. If nothing else, it is one less thing for people to complain about for X years. 

If there is one thing I've learned over the last however many years of watching politics is that someone, somewhere, will always have an issue with what you do as president.  People complained about Obama ordering brown mustard! It's all just pettiness.  It's no secret that I don't like Trump, but of all of the issues I have with him, his owning a bunch of Rolls Royces isn't one of them.  I don't even care if he buys a new one tomorrow. 

[smk4565]

Here is another problem with this tariff idea or attacking China, more than 50% of GM's business is now in China.  If China kicked them out, GM would be a shell of what they are today.  Likewise with Ford if the EU struck back against them.   So all this isolationist stuff is ridiculous, that is the economic strategy of North Korea or communist Russia.

And I don't care what car Trump drives, if he wants to buy 10 Rolls-Royces, more power to him.  People are entitled to buy what they want.  But I don't agree with how he wants to decide what other people buy.

[Robert Hall]

It's pretty clear Trump and the resource units that work for him have no comprehension of how modern global companies work.  

[G. David Felt]

The point and only point I am making is that if our elected gov worker hacks want to blow their horn of Making America Great again, then they should lead by example and not say one thing do something else.

I agree with everyone here that what makes america great is the ability to buy what you want from who you want.

With that said, everyone know here that I back up my support America first by buying America first especially auto's.

Protectionist crap does not work and we have many communist and socialist examples of it's failure.

Most of us know that NAFTA will keep these stupid tariffs in check for North America, but they are aimed at China more than anyone and this is where we need to think twice about how we run and lead a global economy.

[balthazar]

But no one is talking about a ban, just an added 'user fee'. You will still be able to buy what you want (and there will still be a bunch of product you cannot)- little different from any other retail/service market.

That's what Gov't does best- the implementation and collection of revenue streams. An import tax is a revenue stream... and some of that revenue could go toward the children. "You're not against providing for the children, are you??" ™

 

[ocnblu]

As a prime example of what is going on slowly but surely, it should alarm people that the majority of Buick's lineup is built everywhere but here.  That the founding marque of GM, a quintessentially AMERICAN company, has abandoned her homeland (in the name of what, cheap labor?) SHOULD be scrutinized.  If a WWII level of dedication were needed tomorrow from our auto manufacturers, could they heed the call?  A nation who willingly gives up her manufacturing might deserves what she gets when the chips are down and reality sets in.  YES, it IS a matter of national security.  As always, our POTUS heart is in the right place, he loves America and it is his JOB to defend the USA and there are plenty of people who SUPPORT HIS EFFORTS.

[A Horse With No Name]

On 5/25/2018 at 3:36 PM, Drew Dowdell said:

If there is one thing I've learned over the last however many years of watching politics is that someone, somewhere, will always have an issue with what you do as president.  People complained about Obama ordering brown mustard! It's all just pettiness.  It's no secret that I don't like Trump, but of all of the issues I have with him, his owning a bunch of Rolls Royces isn't one of them.  I don't even care if he buys a new one tomorrow. 

I would agree completely.

On 5/27/2018 at 6:29 AM, ocnblu said:

As a prime example of what is going on slowly but surely, it should alarm people that the majority of Buick's lineup is built everywhere but here.  That the founding marque of GM, a quintessentially AMERICAN company, has abandoned her homeland (in the name of what, cheap labor?) SHOULD be scrutinized.  If a WWII level of dedication were needed tomorrow from our auto manufacturers, could they heed the call?  A nation who willingly gives up her manufacturing might deserves what she gets when the chips are down and reality sets in.  YES, it IS a matter of national security.  As always, our POTUS heart is in the right place, he loves America and it is his JOB to defend the USA and there are plenty of people who SUPPORT HIS EFFORTS.

Trump will not reverse the outward flow of jobs, he is making a vain attempt to play to his base, that is all. Agree though that it is a matter of national security, but that boat largely sailed thirty or forty years ago.

My feelings about Trump would quite frankly force me to buy a car made by a non American manufacturer in a non American plant. Not going to buy a vehicle screwed together by people who elected that buffoon. YMMV.

Buick will only speed up outsourcing jobs, nothing is going to change that reality.

[A Horse With No Name]

On 5/26/2018 at 1:27 PM, Cubical-aka-Moltar said:

It's pretty clear Trump and the resource units that work for him have no comprehension of how modern global companies work.  

Since I don't want this thread to devolve into a flame war I suggest we all look at pictures of kittens or vintage muscle cars or whatever. But I highly second what you are saying.