Car import tariffs get chilly Capitol reception
Washington — President Donald Trump’s proposal to levy tariffs as high as 25 percent on imported cars and trucks in the name of national security received a chilly reception on Capitol Hill on Wednesday.
U.S. Commerce Secretary Wilbur Ross testified before the U.S. Senate Finance Committee, and even Republican lawmakers on the panel questioned the idea that imported cars propose a national security threat that would warrant tariffs.
U.S. Sen. Orrin Hatch, R-Utah, who is chairman of the Senate Finance Committee, said he was “stunned” by the president's decision to request that Ross launch an investigation of the national security impact of allowing imported cars to come into the U.S. In making the request, Trump cited a section of federal law that allows the president to impose tariffs if he determines a security threat exists.
“This investigation covers more than $200 billion worth of trade, four times larger than that under the steel and aluminum investigations combined,” Hatch said. “A car isn’t a can of soup, Mr. Secretary. For most American families, their car is the second biggest purchase they make, and many require a car to get to their jobs. It is a significant financial commitment for most families, often paid for with debt, and I’m shocked that anyone would consider making it more expensive.”
Ross famously said in a March interview with CNBC that the steel and aluminum tariffs were "no big deal" because they would result in a less than 1-cent increase in the cost of a can of Campbell's Soup, which he waved as he spoke.
The process Hatch was referring to Wednesday, known as a Section 232 investigation in reference a trade law passed in 1962, was used recently by the Trump administration to propose tariffs on imported aluminum and steel. Any investigation and implementation could take up to a year, if the example of the metals tariff is any indication.
Hatch said the steel and aluminum tariffs have already resulted in higher prices for U.S. companies, citing examples from his home state. He questioned the use of Section 232 for those as well.
"These tariffs do not support U.S. national security," Hatch said. "Instead, they harm American manufacturers, damage our economy, hurt American consumers, and disrupt our relationship with our long-time allies while giving China a free pass."
"American manufacturers are already suffering the consequences of increased cost and decreased supply of steel and aluminum inputs," Hatch continued. "Steel prices are going up. Not just foreign steel subject to tariffs, but also U.S. steel."
Other Republicans on the panel also questioned the Trump administration's liberal use of the Section 232 national security provisions to apply tariffs on foreign goods.
"It’s a very extraordinary remedy that ought to be used very carefully and very selectively," U.S. Sen. Rob Portman, R-Ohio, said of the provision, noting that he is supportive of cracking down on China in other ways. "And it ought to be used for national security reasons, which is why it was drafted."
Democrats on the panel took issue with the scattershot approach the Trump administration has taken to rolling out its trade agenda. They noted that Ross has been accused of having a potential conflict-of-interest when it comes to tariffs on foreign autos because his family owns portions of a company called International Automotive Components Group that he founded before he became Commerce Secretary.
Ross, who founded the IAC group in 2006 and stepped down as chairman of its board in 2014, did not respond to accusations about having a potential conflict of interest.
He defended the tariffs on steel and aluminum and the proposal to place them on imported cars.
"Automobile manufacturing has long been a significant source of American technological innovation," Ross continued. "This investigation will examine the United States’ production capabilities and technologies needed for projected national defense requirements and the adverse effects of foreign competition on our internal economy."
Lawmakers on the Senate Finance Commitee appeared to be unconvinced, raising concerns about increased cost to car buyers.
"The average price of an imported car is $23,200," Hatch said. "If the Department of Commerce were to recommend a 25 percent tariff on cars, it would be recommending raising the cost of an average imported car for an American family by $5,800. To put that in perspective, the median household income in the United States is just over $59,000. That means that roughly ten percent of the median household income could be erased purely by the additional cost of a single car."