Global Geopolitical Series: Prepare for tariffs as U.S. Commerce Department begins national security investigations into Auto imports

The Commerce Department has followed through President Trump’s hint to make a national security investigation into auto imports by the United States and opened a section 232 investigation with an aim to determine whether auto and auto parts import threaten national security.

 A statement from the Commerce Department quoted secretary Wilbur Ross as saying, “There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry……The Department of Commerce will conduct a thorough, fair, and transparent investigation into whether such imports are weakening our internal economy and may impair the national security.”

Since there is evidence, the probe is very likely to find out that excessive auto imports threaten national security, just like the last time when Commerce department found imports of Steel and Aluminum hurt domestic industry; thus U.S. national security. Expect this argument from the Commerce Department to stand out, “During the past 20 years, imports of passenger vehicles have grown from 32 percent of cars sold in the United States to 48 percent. From 1990 to 2017, employment in motor vehicle production declined by 22 percent, even though Americans are continuing to purchase automobiles at record levels.” Opponents’ argument of automation is likely to fail to persuade the department or the administration along with the argument of the price increase.

So, the World! Prepare for the next round of tariffs if you don’t strike a deal with the United States beforehand.

The impact would be an unforeseen one and will last for decades to come - check out these facts,

• Global auto exports were valued at $740.1 billion in 2017 that made it number one export product in the world, surpassing crude, which lost its potion thanks to lower crude price.
• Europe accounts for 54 percent of the exports. ($405.4 billion).
• The biggest exporter is Germany with $157.4 billion exports in 2017, followed by Japan ($93.4 billion), and the United States ($53.6 billion).
• The biggest net exporter is Germany ($98.9 billion), followed by Japan ($82.3 billion), and Mexico ($30.2 billion).
• The biggest net importer is the United States. Its $126 billion deficit is bigger than the next ten countries combined.
• Biggest producing companies in decreasing order - Toyota Motor (Japan), Volkswagen Group (Germany), Daimler (Germany), Ford Motor (United States), BMW Group (Germany), General Motors (United States), Honda Motor (Japan), Hyundai Motor (South Korea), Nissan Motor (Japan).

The outcome of the investigations is likely to come out before the year.