October 23, 2018

Washington Wire: Trump Administration Exploring 25% Tariffs on Autos, Parts

05/24/2018

Trump Administration Exploring 25% Tariffs on Autos, Parts  

 
On May 23, President Trump directed the Department of Commerce to, “determine whether imports of automobiles, including SUVs, vans and light trucks, and automotive parts into the United States threaten to impair national security.” While the government has yet to release an official notification, stating they will post one “soon,” sources indicate the President is asking for a 25% tariffs on autos and automotive parts from all countries. Under Section 232 of the Trade Act of 1962, the Commerce Department has 270 days to present a report the President on its findings, but most in Washington expect an expedited review to last no more than a few months.
 
In 2017, automotive imports accounted for roughly 48% of the 17.5 million units sold in the U.S. (including passenger vehicles, light and heavy-duty trucks). Last year, Mexico exported to the U.S. 2.176 million new passenger vehicles; Canada 1.985m; Japan 1.725m; South Korea 929,419; Germany 491,587; UK 213,000; and Italy 156,000. Of the more than 13 million automotive parts imported into the U.S. in 2017, China shipped 2.6 million components, while our trading allies shipped the following: Mexico 2.3 million, Japan 2.14m, Canada 2.1m, and Korea, 1.18m.
 
Auto industry data shows that overall passenger vehicle production in the U.S. has more than doubled from 5.6 million vehicles in 2009 to 12.2 million in 2016. Studies also show that more than 871,000 Americans work as motor vehicle parts manufacturers – a nearly 20 percent increase over the past five years, a testament to the current health and global strength of the U.S. auto parts industry.
 
According to public statements and private conversations, the U.S. automotive industry nor their supplier organizations requested the 25% tariffs or knew of the announcement to launch an investigation. Most industry groups expressed concern or disappointment by the latest action, especially the use of national security to justify the action, leading most to expect other nations to follow suit applying protections on a host of their own products.
 
Many believe the threat of another tariff will push Mexico, Canada, and Europe closer to the U.S. position in a number of negotiations currently ongoing. The “maximum pressure” approach is, in particular, focused on NAFTA discussions and pushing Europe to agree to reduce their steel and aluminum exports to the U.S., while also forcing their hand on Iran nuclear re-negotiations.

 

 

 
June 1 Deadline Looms for Country Exemptions From Steel, Aluminum Tariffs
 
On June 1, 2018, the Trump Administration is poised to lift the suspension and impose 25% tariffs on steel imports and 10% on aluminum from the European Union, Canada, and Mexico. The President temporarily suspended the tariffs on those countries while negotiating a reduction in imports and a new NAFTA. However, as progress has virtually slowed to a halt, most in Washington believe the threat of the U.S. Government imposing the tariffs on June 1 is increasingly likely.
 
Some sources indicate the EU may consider a 90% import quota based on 2017 levels, which they will then allocate among the member countries but most are pessimistic the U.S., let alone EU nations, will agree. The threat of 25% tariffs on autos escalated concerns in Germany, which leans more towards accepting lower steel shipments and negotiating with President Trump, whereas France and others want to continue pushing back.
 
The President also tied exempting Canada and Mexico from the steel and aluminum tariffs subject to progress being made on NAFTA 2.0 negotiations, which continue to face hurdles with no expectations of talks concluding prior to June 1 when the U.S. Government is poised to impose the 25% and 10% taxes on imported steel and aluminum, respectively.
 
Commerce Secretary Wilbur Ross indicated the administration will not grant additional extensions exempting countries from the tariffs, but the President could lift the tariffs after their imposition or reverse Ross and provide a third extension if he feels enough progress being made in talks with the EU and on NAFTA.
 
South Korea is the only nation to secure a permanent exemption from the steel tariffs (10% on aluminum still applies) as they agreed to limit imports into the U.S. to 70% of 2015-2017 levels. Reporting indicates Argentina accepted 130% import quotas, Australia has publicly stated they have unconditional exemption from tariffs, yet no documents support that position and Brazil is now disputing U.S. statements and saying they did not agree to an import quota program similar to what Korea accepted. The tariffs are already in effect on Japan, Switzerland (not part of EU), India, Turkey, China, Russia, and the rest of the world.
 
The situation remains fluid with most pessimistic of agreement prior to June 1, particularly with the U.S. Memorial Day holiday. Increasingly, all sides are bracing for steel and aluminum tariffs on Europe, Canada, and Mexico starting June 1.

 

 

 
New European Data Privacy Law Takes Effect
 
Beginning on May 25, 2018, the European Union’s General Data Protection Regulation (GDPR) imposes new rules around protecting the personal data of individuals located within the EU. Any company that stores or processes personal information about EU citizens within EU states must comply with the GDPR, even if they do not have a business presence within the EU. This includes U.S. companies marketing to European customers or whose websites capture IP addresses, have “Contact Us” forms to fill out, or capture any other personal identifier information.
 
Key Requirements: 
  • Lawful, fair and transparent processing: Companies must have a legal reason for processing an individual’s data, such as the individual is a customer or has provided consent. Also, individuals must be informed regarding how and why their information is being processed. 
  • Limitation of purpose, data, and storage: The purpose for which data is collected must be specified, explicit and legitimate and only relevant data should be collected and processed. 
  • Data subject rights: The data subjects have the right to ask the company what information it has about them, and what the company does with this information. In addition, a data subject has the right to ask for a correction, object to processing, lodge a complaint, or even ask for the deletion or transfer of his or her personal data. 
  • Consent: When consent is the legal reason for the processing of an individual’s data, that consent must be freely given, specific, informed, and unambiguous. In addition, data subjects must have the ability to revoke consent at any time and it must be as easy to withdraw as to give consent. 
  • Data Breach Notifications: For any data breaches that might cause harm, companies must report the discovery of the breach within 72 hours. 
  • Privacy by Design/Privacy by Default: Companies are required to make privacy a key consideration in any aspect of the way they collect, store and use data.
 
While the reach of the GDPR is broad, it is not unlimited. Merely having a website that can be accessed by individuals in the EU does not automatically require a U.S.-based company to comply. However, any company that does business with companies or individuals in the EU; directly markets to customers in the EU; or monitors and stores personal data of any individual in the EU, such as the recording and storing the IP information from website visitors or website contact forms.
 
To determine if the GDPR applies to your company and begin the compliance process the first and most important step is to determine what personal data you collect, process and store. What data do you have? Do any of the data subjects reside in the EU? How is the data being processed? Why is the data being collected? Is it necessary for business operations?
 
Fines for noncompliance can be large, as high as 20 million euros or 4% of a company’s total global revenue, whichever is larger. For more information from the U.S. Department of Commerce on the DGPR and compliance, click here.