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Shutdown adds to industry’s trade headaches

3 min read

The furloughs of “nonessential” personnel because of the partial government shutdown have stalled several functions that, if not essential, are still important to the auto industry.

Agencies in the departments of Commerce, Homeland Security and Transportation, among others, are awaiting congressional appropriations to continue operating, but heading into the weekend there were no signs of a compromise on a funding deal as the White House and Democratic lawmakers remained at an odds over a border wall and President Donald Trump weighed invoking emergency powers.

The industry has worked through previous shutdowns, but one area in which this shutdown’s effects are being felt acutely is trade, because of the Trump administration’s new tariff policies. Many automakers and suppliers are applying for product-specific exemptions from tariffs on steel and aluminum and $250 billion worth of Chinese-made goods, including auto parts. But no one is there to process those requests.

Meanwhile, the U.S. trade representative was to begin an orderly shutdown Monday, Jan. 14, after exhausting its operating funds. High-level officials will still report and could potentially engage in ongoing trade talks with foreign counterparts in China, Japan and the European Union, “but they don’t have the support staff, which often includes Commerce, State, the ITC, Customs,” said Nicole Bivens Collinson, head of international trade and government relations at Sandler, Travis & Rosenberg.

“So as far as having any substantive or meaningful discussions, I don’t know that they can do it.”

Exemption requests from companies that can’t find steel and aluminum domestically in the grade or quantity needed are also on hold because the Commerce Department is closed.

Even companies with products that won China exemptions, such as plastic injection molds used to build autos, can’t take advantage of the U.S. trade representative’s favorable Dec. 28 decision. “The tariff numbers have to be changed within the Customs automated system, and the people who would do those changes to the data are furloughed. So even if your product is exempt, if you make an entry on it, you still have to pay duties,” Collinson said.

At NHTSA, all vehicle safety activities — rulemaking, enforcement, data analysis and consumer testing — are suspended, according to its shutdown plan.

“In some cases that’s going to create inconveniences. In some cases it’s going to leave consumers without information and in some cases it leaves lives at risk,” said David Friedman, vice president of advocacy at Consumer Reports and a former NHTSA deputy administrator.

Other areas in which the shutdown is affecting the auto industry:

  • NHTSA isn’t conducting recall investigations, but will respond if there is an imminent threat to life.
  • The ITC isn’t working on the economic impact analysis of the U.S.-Mexico-Canada trade deal, potentially delaying congressional action to implement it.
  • The Securities and Exchange Commission isn’t signing off on initial public stock offerings, potentially slowing the anticipated IPOs of Uber and Lyft.
  • The EPA and NHTSA aren’t drafting the rulemaking to amend fuel-economy and emissions standards or safety regulations, potentially delaying their release.

What do you think?