U.S. Plans Hearings in July on Tariffs for Imported Cars

The U.S. Dept. of Commerce will conduct two days of public hearings on July 19-20 about whether passenger vehicles is a threat to national security.

The hearings in Washington, D.C., are prelude to the Trump administration’s threat to hike tariffs on imported vehicles to 25% from the current 2.5%. The White House used the same argument to justify its intent to tax imported aluminum and steel by 10% and 25%, respectively.

Commerce Secretary Wilbur Ross promises a “thorough, fair and transparent” investigation. Last week he cited unspecified evidence “suggesting that, for decades, imports from abroad have eroded our domestic auto industry.”

At issue is whether such erosion has displaced jobs and reduced the capacity of traditional domestic carmakers enough to jeopardize the ability of domestic carmakers to innovate and make vehicles on behalf of the nation’s defense.

Critics dismiss that scenario as ridiculous. The U.S. Chamber of Commerce declares that punitive tariffs would “deal a staggering blow to the very industry it purports to protect.”

Since 1970, foreign brands have boosted their share of the U.S. auto market from 15% to 56%. Over the same period, foreign carmakers relocated more than 60% of the production of those vehicles from their home plants to factories in North America, according to Autodata Corp.

Doing so means that the share of the U.S. car market represented by passenger vehicles built outside North America has doubled to 36% over nearly 50 years. But the proportion of vehicles sold in the U.S. by foreign-controlled plants, whether located overseas or in North America, remains at 56%.