The latest US industry to express concern about potentially wide-sweeping steel tariffs once the results of the ongoing Section 232 investigation are announced is the automotive sector. While US auto manufacturers use primarily US-produced steel, industry analysts agree with steel analysts at SteelOrbis who contend that protective trade measures that restrict imports will likely result in US domestic steel mills raising their prices.
Widespread price increases would make US-made cars more expensive, which could result in a strong uptick in demand for imported vehicles.
Alan Deardorff, professor of public policy and economics at the University of Michigan, told the Detroit News today that “it’s ironic that in discouraging imports of steel, [Trump] may encourage the imports of cars.”
While many foreign auto producers have manufacturing facilities within the US that would be subject to import tariffs, imported vehicles are still a major part of the US automotive market. According to industry data, approximately 20 percent of all US auto sales in 2016 were vehicles produced offshore (not counting NAFTA partners). Sales data typically combine all vehicles produced in North America, but looking at production numbers, over 30 percent of North American-produced vehicles in 2016 were manufactured in Canada and Mexico.