New Tariffs On Auto Imports

Just last week, significant developments made way in the automotive sector in regards to trade policy. However, the deadlines presented in the coming week (May 28-June 2) may lead to even greater disruption in the auto and advanced manufacturing sectors and require close attention.  For example, the Trump Administration is currently undergoing investigations as to whether or not automobile imports should require tariffs, 25% on auto imports to be exact. The Secretary of Commerce has 270 days to conduct an investigation and present the Department of Commerce’s findings and recommendations to the President.  If the Secretary finds that an import threatens to impair US national security, the President shall determine whether he agrees with those findings within 90 days.  If so, he must determine what, if any, action to implement to “adjust” the imports of the article in question so that they will not threaten to impair national security. [Dickinson Wright]

CBS News states, “The White House said in a statement Wednesday that the president had asked Commerce Secretary Wilbur Ross to consider whether the imports of automobiles, including trucks, and automotive parts threaten U.S. national security.”  According to The Washington Post on May 24, 2018, “The Trump administration is considering new tariffs on imported cars in a move that trade analysts said was designed to put pressure on Mexico during the final stages of negotiations for a new North American trade deal.” In fact, the article goes on to say, “Negotiators for the United States, Mexico and Canada remain deadlocked over rules for granting duty-free status to vehicles under a new North American trade deal.”  It’s been nearly a year since negotiations for NAFTA 2.0 have gone underway and they may even run into 2019.  Click here to read the entire article.

Rules of Origin

Dickinson Wright, a law firm with many niches, states, “While the NAFTA appears in stall mode until after the July 1 elections in Mexico and potentially the US November midterms, the potential for a deal to rapidly come together is ever-present, even one that may not be ratified in 2018.  Any solution the parties reach on auto Rules of Origin (ROO) will have place significant compliance burdens on the suppliers.  Companies should be ensuring that all documentation, origin certifications, and records are up to date as OEMs likely will be reviewing all supplier contracts and compliance protocols in the lead-up to a new NAFTA.”

Other great reads on the topic include:

The Politico •  The Globe and Mail •  The Financial Post  •  The China Post