MEMA Briefing Addresses Auto Parts, Threat To National Security

Participants at an April 9 MEMA policy breakfast on potential auto and auto parts tariffs considered how a recent landmark decision by the World Trade Organization (WTO) might affect the United States.

The U.S. Department of Commerce has completed its Section 232 national security investigation of imports of automobiles and automotive parts, but it hasn’t publicly released the findings. In the meantime, MEMA members are struggling with uncertainty and worried about jobs, investment and customer prices, said Ann Wilson, MEMA’s senior vice president of government affairs.

Wilson and Chad Bown, Reginald Jones senior fellow at the Peterson Institute for International Economics, discussed the WTO’s April 5 decision on Russia’s trade restrictions with Ukraine for possible insight.

The WTO ruled that Russia couldn’t unilaterally impose trade restrictions based on perceived national security threats. But, then, after its own review, it said the tariffs really were being driven by a national security interest.

The United States acted as a third party in that case, supporting Russia and saying that the WTO didn’t have the power to rule on the matter.

The decision could affect a similar U.S. national security argument, Bown said.

“This makes it look like the WTO will say, ‘No, we do have a right to look at this issue,’” Bown said. “Then, the big question would be: Are any tariffs or trade restrictions on steel, aluminum or autos really being driven by an international emergency and legitimate national security interest? It’s hard to see that out there.”

Wilson said she’s heard that the WTO isn’t very interested in getting in a tit-for-tat with the Trump administration.

Time will tell, but as the 2020 elections approach, Republicans will likely be less and less willing to challenge President Trump’s proposals, Bown said.

For more information on the tariff debate and the upcoming national security report, click here.

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