U.S. Legislative News

President Delays Tariffs on European and Japanese Auto Imports

President Trump announced his decision to delay tariffs on automobiles and auto parts imported from Europe and Japan for six months on May 17, 2019. The decision came on the heels of a dramatic escalation of tariff hikes on goods exchanged between China and the U.S.

The president believes that imported cars and car parts are harming the American automobile industry and initially provided countries who export autos to the U.S. 180 days to reach new trade agreements addressing the issue. Trump’s decision to delay gives stakeholders a narrow window to negotiate complicated trade deals rife with disagreement.

Additionally, a bipartisan group of nearly 160 lawmakers wrote a letter to the Director of the National Economic Council, Larry Kudlow, rejecting the idea that auto imports threaten national security and denouncing auto tariffs as harmful to American auto workers and the U.S. economy.

The auto industry has also been united in opposition to tariffs, which would hurt American automakers and companies abroad. Cars rely on a complex global supply chain with thousands of parts sourced from around the world. The Center for Automotive Research found in its analysis that imposing tariffs on foreign autos and auto parts could potentially raise the cost of new cars by thousands of dollars, significantly impacting new car sales and auto industry jobs.

NAFA is concerned about the impact of potential tariffs on autos and auto parts, as increased costs would undoubtedly pose a substantial challenge in vehicle acquisition and servicing. NAFA has urged leaders in Congress to reclaim congressional authority over trade-related matters and to increase oversight into the Administration’s actions on these issues.

Trump Increase Tariffs to 25% on Chinese Imports – Auto Parts Included

On May 10, 2019, U.S. Trade Representative Robert Lighthizer announced an increase of duties to 25% from 10% on approximately $200 billion worth of Chinese imports. The press release also noted that the administration would begin the process of raising tariffs on virtually all remaining imports from China, which are valued at approximately $300 billion.

The increased tariffs cover over 100 auto parts, including spark plugs, exhaust pipes, brake rotors, tires, engines, and other components that go into the construction of cars. Those opposed to the 25% China tariffs have described them as a “gut-punch” to the auto industry. The U.S. imports $10 billion in auto parts annually from over 1,000 Chinese companies, and because of the auto industry’s reliance on complex cross-border supply chains, reliable and affordable alternatives are not readily available.

In response to the increase, China imposed retaliatory tariffs on $60 billion worth of U.S. goods set to take effect on June 1, 2019. President Trump and Chinese President Xi Jinping are set to attend the G20 summit in Japan next month. Before the U.S. levied the 25% tariffs, Trump spoke to the press of his intent to meet with Jinping at the summit to discuss trade.

NAFA continues to work with the Auto Alliance, the Auto Care Association, and the Motor & Equipment Manufacturers Association (MEMA) to address the impact of the tariffs on the auto industry.

House Advances EPA Appropriations for DERA and Clean Cities

On May 22, 2019, the House Appropriations Committee approved the Interior-Environment funding bill for FY 2020. The funding bill includes $55 million for Diesel Emissions Reductions (DERA) grants. This would be a reduction in funding from the FY2019 funding level of $82 million for DERA grants. The Appropriations Committee is also recommending $42.3 million for the Clean Cities program for FY 2020. This is an increase of $4.5 million from $37.8 million in the current fiscal year.

NAFA is a member of the DERA coalition, which advocates for increased funding for these grants and is currently engaging with legislators to stress the importance of the programs. The Senate must also pass a version of the Interior-Environment funding bill, which provides a window of opportunity to revise the allocations included in the House bill. NAFA will continue to monitor and engage in the appropriations process as it continues over the next several months and likely later into the year.

Senate Minority Leader Pushes for Limo Safety Reform

Senator Chuck Schumer (D-N.Y.) is calling on the National Transportation Safety Board (NTSB) to add safety reforms for limousines to its “Most Wanted List” of top safety improvements that can be made across all modes to prevent accidents, minimize injuries, and save lives in the future. NTSB can prioritize and advance items placed on the list, which is what the Senator is aiming for on limo safety reforms.

Sen. Schumer wants the NTSB to require aftermarket stretch limousines to be fitted with proper seatbelts and airbags, including side airbags, as well as requiring an annual federal Department of Transportation (DOT) inspection. Several tragic limo crashes have highlighted the gaps in the safety standards required for stretch limos.

Gas Tax Bill Introduced in the House

On May 21, 2019, Earl Blumenauer (D-Ore.) introduced the Rebuild America Act of 2019 (H.R. 2864), to increase the federal motor fuels tax by five cents a year starting in 2020. After 2023 the federal gasoline tax would rise to 43.3 cents per gallon and the federal diesel tax would increase to 49.3 cents per gallon. After 2024, the tax would increase based on inflation. If enacted, this legislation would bring the first increase in the federal motor fuels tax since 1993. The gas tax currently sits at 18.3 cents/gallon, and diesel tax is 24.3 cents/gallon. As the gas tax is the primary revenue source for the Highway Trust Fund, this bill would aim to reduce the repeated funding shortfalls the fund has faced in the past.

The bill was introduced on the eve of a planned infrastructure meeting between Congressional leaders and the White House, with funding and potential sources of revenue to be key points of discussion. The meeting ultimately ended abruptly due to broader political disagreements between the president and congressional Democrats. Officials at the White House, including the acting Chief of Staff, Mick Mulvaney, have downplayed the possibility of the president supporting a motor fuels tax increase, although he has expressed support for the idea in past meetings with lawmakers.

NAFA supports an increase in federal fuels excise tax on gasoline and diesel, as well as efforts to test and find a funding solution that provides for the long-term solvency of the Highway Trust Fund.