On May 23, 2018, the Trump administration announced that it is launching an investigation into the impact on US national security of imports of autos and auto parts, pursuant to Section 232 of the Trade Expansion Act of 1962 ("Section 232"). The move would follow recent investigations, and subsequent tariffs, into imports of steel and aluminum products into the United States. (See our previous updates on tariffs on steel and aluminum imports and, in particular, on Chinese imports.)
Though Section 232 has been sparingly used by previous administrations, the Trump administration's investigations of steel and aluminum products have garnered much attention. An additional investigation into imported autos and auto parts would be significant, especially after indications that the administration would not pursue further Section 232 investigations.
Some have speculated that this most recent use of Section 232 is part of a larger strategy in the ongoing discussions between the United States, Canada and Mexico to renegotiate the North American Free Trade Agreement (NAFTA), especially since issues surrounding the rules of origin for imported autos and auto parts have been major sticking points in those negotiations. The threat of additional tariffs pursuant to Section 232 may be intended to encourage Canada and Mexico to strike a deal now so the retooled agreement can be voted on by the Republican-controlled Congress in a “lame duck” session in December.
We expect the new Section 232 investigation into autos and auto parts to follow the same timelines and procedures as the prior investigations into steel and aluminum. Thus, there will be a public hearing and the opportunity to file written comments. Within the next few hours or days, we expect the US Department of Commerce to issue a Federal Register notice that will, among other things, set out these procedures and provide clarity on the products covered by the proceeding.
