August 2020 Volume 2

WASHINGTON UPDATE

steel must be sourced in North America. The attempt was to try to create a situation where you have the ability to have a bit more of a level playing field and not incentivize offshoring of production. But again, there's ways to calculate to the see if there's net-net equal. Some people would say, “yeah, that's the intent,” and then some people would say, “okay, if I have to pay more for steel, why don’t I just move it abroad?” 2.5% might not be a significant enough tariff on certain passenger vehicles or parts. It's hard to say how this all correlates. Over time, we'll see whether USTR’s bet is the right one that USMCA will result in more onshoring in North America. 19. Is the tariff on cargo and heavy trucks 25%? Would cargo and heavy truck be class 4-7 (cargo), and class 8 (heavy truck)? The 25% tariff is on light trucks and light cargo vehicles. All trucks are generally 25%tariff; the exceptions are diesel cab chassis between 5-20 tons (4%) and special purpose vehicles.

20. USMCA states 70% steel content must be sourced in N.A. What’s the tariff if they don’t source 70%? Still 2.5%? Example: A U.S., Mexican, or Canadian component manufacturer imports a forging. Would that component be considered manufactured with N.A. content even though the steel and forging were imported? How will this be accounted? Who does the accounting? The 70% North American steel & aluminum rule applies only to automakers, but automakers may ask suppliers to submit documentation to help them reach their 70% target. Automakers will certify this to the CBP. The rules are here: https://www. federa lregister.gov/documents/2020/07/01/2020-13865/ implementation-of-the-agreement-between-the-united-states-of america-the-united-mexican-states-and 21. For steel content accounting, will the OEM require suppliers to report if their steel was sourced in N.A.? The OEM can do that. As we understand it, automakers are not mandated to collect this information from their suppliers, but they can collect it for purposes of documenting their own compliance. ■

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FIA MAGAZINE | AUGUST 2020 33