Most Commenters Strongly Oppose Section 232 Auto Tariffs

More than 2,000 people and organizations submitted comments on the idea of implementing higher tariffs on imported cars and car parts, with the overwhelming majority rejecting the idea. The National Association of Manufacturers noted that U.S. automotive exports increased eight-old from 1980 to 2017, and that imported parts are vital to automotive manufacturing's price competitiveness.

The Alliance of Automobile Manufacturers, which represents 12 auto companies, domestic and foreign, both those with plants in the U.S. and others, said implementing a 25 percent tariff on cars and auto parts would cause a 1.5 percent decline in domestic production, and cause 195,000 job losses in the U.S. -- and that's before any retaliation. The U.S. imported more than $270 billion in autos and auto parts in 2016, the organization's submission said, with 98 percent of the vehicles coming from allies.

"It may seem attractive in this instance to pursue economic goals under the umbrella of national security considerations; however, doing so could very well set a dangerous precedent that other nations could use to protect their local market from foreign competition," the Alliance wrote. It would be better to reach a NAFTA deal, negotiate a free-trade agreement with the European Union, and advocate for U.S. safety standards to be accepted in other countries.

The European Union challenged some of the premises behind the review. "Imports have not undermined the expansion of domestic production in the US, which has steadily increased in the last ten years and has fully recovered from the economic recession," the EU said in its comments. Additionally, "there is no national security threat from imports of automobile and automotive parts," the EU said in news release. " As only products from US based manufacturers are used by the US military, any trade restrictions imposed on the passenger car, light trucks and car parts market cannot be justified on national security grounds," it said.

BMW wrote that the reason it has spent nearly $9 billion building and upgrading its South Carolina plant was not because it was worried it would not be able to sell vehicles made abroad because of restrictive trade policies. "Rather we invested and continue to invest in the United States because it makes economic sense for us to do so," the company said, and noted it plans to add 1,000 jobs there, and is a net exporter. More than 70 percent of the South Carolina plant's vehicles are sold outside the U.S.

It noted that 32 percent of its U.S. exports go to China, and retaliatory tariffs on American cars by China makes other BMW plants more competitive for exporting to that country. It said it pays the 10 percent duty in the EU on about 100,000 cars it makes in South Carolina and sells in the EU each year, and it supports lowering that tariff. But it said threatening to hike auto tariffs is not the most effective way to meet that goal.

General Motors, the largest single seller in the U.S. market and the largest domestic firm, said that raising tariffs on autos and auto parts "could lead to a smaller GM," and would risk more U.S. jobs than not taking action. The company said that higher prices for cars would reduce demand, and the cars that would have the largest increases would be the least expensive models -- which tend to have the buyers who can least afford a hike in cost.

The National Association of Foreign-Trade Zones said the auto industry is one of its largest sectors, and it said that if the president were to hike tariffs under Section 232, it would be something Congress never intended. But if tariffs are raised, NAFTZ President Erik Autor asked that the proclamation acknowledge FTZs, and if foreign articles undergo substantial transformation while in an FTZ, they should be treated as domestic items as they exit.

CARSUSA Shipping, a U.S. customs broker and international freight forwarder that specializes in vintage and museum-quality used cars, said there's no way a vintage Ferrari, Jaguar or Aston Martin could affect national security. It opposes all tariffs on cars and car parts, but if they have to come, used cars and used parts should be excluded.

Martin Button, CEO of Cosdel International, wrote: "I certainly hope the Department of Commerce can find a more appropriate method of leveling the playing field with foreign countries supplying vehicles and parts to the USA without putting hundreds of thousands of Americans (including me and my staff) out of work, which is exactly what would happen if we do apply this tariff as broadly as written."

Many individual car collectors also submitted comments. Peter Volney of Arizona said, "I voted for President Trump and do support most of his policies but frankly this one is absolutely ridiculous. How can imported collector cars and car parts possibly be deemed a security risk? In fact how can any imported car or car part be a security risk? ... If this is in fact an attempt to force Americans to buy domestic vehicles it is bound to fail ...." About 55 percent of cars sold in the U.S. were manufactured in the U.S., under both U.S. and foreign brands.

The United Auto Workers offered qualified support for the proposal, saying that Mexico and China deserve to be targeted but Canada does not. UAW said Mexico suppresses workers and China practices currency manipulation and forced technology transfers. "Canada's $16.7 billion finished automobile deficit is nearly offset by our $14.7 billion surplus in automotive bodies and parts," the union said. UAW represents workers in the U.S. and Canada. It noted that the auto parts trade deficit has exploded with Mexico, China, South Korea, Taiwan and Germany in the last 10 years. It pointed to NAFTA as a bad deal that shifted production to Mexico.

The Association of Equipment Manufacturers, which makes tractors and other agricultural equipment, said it and its 960 member companies support "sensible policies reinforcing our domestic manufacturing base," but said they want to make sure that the Commerce Department follows through on Secretary Wilbur Ross's remark that the U.S. does not intend for components with the same HTS code, that are used in both cars and tractors, to face the same tariffs. They offered "to provide technical expertise in support of his commitment to exclude the off-road equipment industry."