US President Trump seems to have German automakers in his crosshairs. Earlier this year, he stated: “we’re gonna tax Mercedes-Benz, we’re gonna tax BMW’ if the EU does not lower trade barriers to US imports. A little more than two months later, he teased on Twitter a major upcoming announcement: “There will be big news coming soon for our great American Autoworkers. After many decades of losing your jobs to other countries, you have waited long enough!” He then followed up by announcing a national security investigation into car and truck imports that could lead to new US tariffs: “Today, I met with Secretary of Commerce Wilbur Ross to discuss the current state of our automobile industry. I instructed Secretary Ross to consider initiating a Section 232 investigation into imports of automobiles, including trucks, and automotive parts to determine their effects on America’s national security.”
Section 232 of the Trade Expansion Act of 1962 authorizes the executive branch to conduct investigations to “determine the effects on the national security of imports.” Within 270 days after initiating the investigation, the Commerce Department must issue a written report with its findings. The US President then has 90 days to determine whether “to adjust the imports” through tariffs or quotas.
This Section 232 investigation is the same procedure the Trump Administration used earlier in the year to impose new tariffs on steel and aluminum imports. Recognizing the need to tie any such tariffs to a national security concern, President Trump argued in a statement that “Core industries such as automobiles and automotive parts are critical to our strength as a Nation.” Secretary Ross made a similar statement: “There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry.” Many commentators suggest these national security concerns are mere pretext and any resulting tariffs are illegal. Others believe the Section 232 investigation is just a tactic to better position the US in its ongoing negotiations over the North America Free Trade Agreement.
If the Trump Administration does ultimately impose tariffs on automobiles and automotive parts, the effect on the German automobile industry could be significant. Germany is one of the biggest exporters of automobiles and parts to the US together with Mexico, Canada, Japan, South Korea and Brazil.