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President Trump Ponders Steel, Aluminum Tariffs That Could Raise Car Prices

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When asked which metals are used the most to make cars, most likely the answer would be steel, possibly followed by aluminum. If you were to wonder where that steel comes from for vehicles made in the US, though, the answer is mostly “somewhere else.”

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According to a report released by the US Department of Commerce, the US imports nearly four times the steel it exports, with cheap steel and aluminum coming in from countries like China and South Korea. The report further said that US steel production employment has dropped 35% since 2000, and aluminum employment has fallen 58% between 2013 and 2016.

So, concluded Commerce Secretary Wilbur Ross, the US should implement high tariffs on imported steel and aluminum. Specifically, for steel that would be at least 24% across the board, and at least 53% on steel from China, South Korea, Russia, and nine other countries with a quota on imports. For aluminum, Ross suggested an across-the-board tariff of 7.7% and 23.6% on China, Hong Kong, Russia, Venezuela, and Vietnam, with a more restrictive quota.

To underscore how dire the Commerce Department seems to think the influx of cheap steel and aluminum is, this report is a “Section 232” report, which is conducted when imports are suspected of affecting national security.

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The recommendations from the report are now up to President Trump to accept, reject, or modify, to be decided by mid-April. In a meeting with Congress members, Trump seemed sympathetic to the tariffs, despairing of “empty factories, steel factories, and plants” that he had seen. Some Republican senators, though, warned him that past tariffs like this just raised the price of steel and ended up causing automakers and auto part manufacturers to cut jobs and move out of the country.

In particular, American automakers Ford and General Motors opposed the proposed tariffs, with both pointing out that although they use American-sourced steel and aluminum for the vast majority of their production, the price hike due to pricier parts and vehicles would lead to lower sales in the US and abroad.

News Sources: Detroit Free Press, US Department of Commerce