WASHINGTON -- The auto industry has been on edge for nine months waiting for a Commerce Department determination on whether imported vehicles and parts are harming national security. More anxiety could be in store because the report, due to be delivered to the White House by Monday, isn't likely to be made public anytime soon.
President Donald Trump is widely expected to take some sort of action against auto imports within the required 90 days after receiving the report, but auto interests say any negative findings should be shared now to lift the cloud of uncertainty that has crimped investment.
"If you're subjecting products that my members sell to tariffs and accusing me of potentially being a national security threat, I think the least you can do is let them know the outcome," said Cody Lusk, president of the American International Automobile Dealers Association. "We've waited 270 days for this bogus investigation."
The Commerce Department launched its investigation in May based on a rarely used provision of trade law that allows the president to restrict certain imports for national security reasons. Critics say the Section 232 provision was intended for direct security threats such as wars and that invoking it simply for domestic economic advantage is an abuse of power.
The administration undertook the investigation even though it has no support within the industry. None of the 40 industry groups that testified at a hearing last summer spoke in favor of restricting auto imports. Even the UAW, which has traditionally favored policies that would prevent outsourcing jobs, didn't fully endorse the idea.
"You're striking at the heart of American manufacturing in every possible way," said Vanessa Sciarra, vice president for trade and investment policy at the National Foreign Trade Council. "Can this possibly be a good thing?"
The Commerce Department is expected to present the president a range of options, including wholesale or targeted tariffs at rates up to 25 percent. Narrower actions could target innovative technologies such as autonomous cars, including limiting foreign investment in those areas, or pursuing voluntary export restraints as U.S. Trade Representative Robert Lighthizer did with Japan as a trade negotiator in the 1980s, lobbyists speculated.
Although the report will probably be shrouded in mystery, stakeholders are expected to come out swinging against the substance and process, arguing that tariffs, depending on their severity, could wipe out 82,000 to 715,000 jobs as higher prices choke demand for cars and repairs and nations retaliate with tariffs on U.S. auto exports.
At the outset, some dealers were reluctant to believe Trump would follow through with auto tariffs, Lusk said, but now more of them are worried that tariffs will drive up monthly payments and drive customers away.
Luxury brands
Luxury import brands, such as Mercedes-Benz and BMW, are likely to feel the most pain, as their sticker prices could rise several thousand dollars, analysts say.
A large coalition of companies and trade associations has been alerting lawmakers for months about the employment impact. Now, they are readying letter-writing campaigns, meetings and other outreach to governors and members of Congress, especially in states without auto plants, alerting them to the potential economic fallout faced by their constituents, including suppliers, parts distributors, dealerships and consumers.
Several lawmakers already have proposed legislation to curtail the president's power to impose national security trade remedies.
"The report triggers an opportunity for everyone to reassess what tariffs can potentially do to our national economy and have a more vigorous dialogue with the White House, pushing for them not to impose tariffs," said Ann Wilson, senior vice president of government relations at the Motor & Equipment Manufacturers Association.
"We feel very strongly that it's important to release it," she added. "Because of what is at stake, it's important for the industry and members of Congress to understand the rationale of the Department of Commerce."
Last year, details of a Section 232 report on steel and aluminum tariffs weren't released until a month after the president received it. He followed through with a 25 percent tariff on steel and 10 percent on aluminum, with three countries agreeing to quotas instead.
Many political observers here have suggested the administration may defer action, preferring the threat of tariffs as leverage in upcoming trade talks with Europe and Japan. But Sciarra said that negotiating strategy is undercut by the groundswell of domestic opposition, which means trading partners won't take the threats very seriously.
