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Multiple Bills Propose to Delay or Prevent Section 232 Auto Tariffs

A bi-partisan group of senators led by Sen. Doug Jones (Democrat-Alabama), along with four Republican lawmakers, introduced on 25 July the Automotive Jobs Act of 2018 (S. 3266). This legislation would delay the implementation of any tariffs under Section 232, the national defence-based provision already used to implement global tariffs on steel and aluminium. It would do so by requiring the independent, non-partisan U.S. International Trade Commission to devote 180 days to study the economic well-being, health and vitality of the U.S. automotive industry. During that time, the U.S. Department of Commerce’s analysis initiated in May that could result in the eventual imposition of auto tariffs would be stayed.

An especially interesting aspect of this bill is that it would define a “United States automotive producer” as an entity that manufactures or assembles automobiles or component parts for automobiles in the United States. This definition is a departure from the common assumption that a U.S. auto producer must necessarily be headquartered in the United States.

In fact, Sen. Jones’ home state of Alabama is a leading assembler of cars and parts for non-U.S. headquartered producers. According to information from the Alabama Department of Commerce, assembly plants operated by Mercedes, Honda and Hyundai produced around one million cars and light lorries in 2017, along with 1.7 million engines produced by Toyota, Honda and Hyundai. As a result, Alabama now has some 40,000 automotive jobs. Another large plant for a Toyota-Mazda joint venture is scheduled to open in 2019 with an additional 4,000 jobs, but that operation would presumably be negatively impacted by any Section 232 automotive tariffs.

One of the co-sponsors of S. 3266 (retiring Sen. Corker of Tennessee) had previously sponsored legislation (S. 3013) to amend the Trade Expansion Act of 1962 to require congressional approval before the president could adjust any imports that are determined to threaten to impair U.S. national security. Introduced on 6 June, that bill attracted 16 co-sponsors and received numerous letters of support from U.S. stakeholders.  However, it has never even been discussed within the committee of jurisdiction, the Senate Finance Committee. 

Sen. Jones is also one of three co-sponsors of a third Senate bill, S. 3329, that would amend Section 232 to require the secretary of defence to initiate investigations and provide for congressional disapproval of certain actions. The chief sponsor of this bill, Sen. Rob Portman (Republican-Ohio), is himself a former U.S. trade representative. Introduced on 1 August, S. 3329 would switch jurisdiction for Section 232 from the DOC to the U.S. Department of Defense as well as increase congressional oversight. Ohio has firms that produce the metals subject to the Section 232 tariffs but also many plants that are facing higher costs as they purchase needed metal. 

Moreover, Sen. Bennett (Democrat-Colorado) on 18 July introduced S. 3230, which would mandate not only additional congressional oversight but also approval by the secretary of defence and the director of national intelligence. This bill had no co-sponsors as of this writing, however.

The following three bills have been introduced in the House of Representatives.

  • H.R. 5281 (Global Trade Accountability), currently with 23 co-sponsors, would not allow for tariffs unless a joint resolution passes both houses of Congress. It is worth mentioning that House bills typically have many more sponsors than Senate bills, since there are 435 representatives compared to only 100 senators.
  • H.R. 5760 (Trade Authority Protection), currently with 12 co-sponsors, provides that tariff actions would be subject to potential disapproval by both houses of Congress.
  • H.R. 6337 (Amending the Trade Expansion Act of 1962), currently with 22 co-sponsors, provides for a 60-day congressional review period and tariffs would only go into effect with a joint resolution.

Even if none of these bills become law, the abundance of legislative action provides an indication to the Trump administration of the significant concerns and interest by Congress in the proposed auto tariffs as well as the unprecedented use of Section 232 to establish tariffs.

Content provided by Picture: HKTDC Research
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