According to foreign media reports, the Trump administration is considering levying car imports in the name of protecting US national security in accordance with Section 232 of the Trade Expansion Act of 1962 (which is the most famous "232 investigation" in the US business field). tariff.
Last month, US Secretary of Commerce Wilbur Ross announced an investigation and received written comments and public hearings. The US government will consider the comments and may make a final decision this fall.
The steel and aluminum tariffs that came into force at the beginning of this month under the “232 Survey†are based on the argument that these two civilian and military important materials cannot be over-reliant on imports. The healthy development of military and civilian industries is mutually reinforcing. Modern industry is large and complex. It takes millions of dollars to develop new and most advanced products. The only way to establish and maintain a world-class military industry is to work with the civilian industry to share costs. This is a business model for the steel and aluminum industries, and the same logic applies to the automotive industry.
Historically, the civilian and military automotive industries have been intertwined. In the Second World War, General Motors, Ford Motor Company and other automakers were praised by Roosevelt administration as a key pillar in making the United States a "democracy arsenal."
These automakers have remodeled their factories and produced hundreds of thousands of military vehicles to drive the US Army's victory in Europe and East Asia.
In 2003, GM sold its General Dynamics division for $1.1 billion, and announced its withdrawal from the military business. But GM continues to supply powertrain components to a variety of military contractors, including engines, gearboxes and components.
Last year, GM re-entered the military business and established a new division called GM Defense LLC. Currently, GM Defense LLC has several major projects developed jointly with the US military.
GM's SURUS is a truck platform powered by a hydrogen fuel cell. SURUS was originally a truck framework developed for the commercial consumer market. Hydrogen fuel cells are attractive for both the civilian and military markets as they replace the need for petroleum fuel sources. The US Army is evaluating other advantages offered by fuel cell vehicles, including the quiet operation of their motors and the ability to generate water from hydrogen fuel sources.
Another GM program the Army is evaluating is the military version of the Chevrolet Colorado fuel cell-powered pickup truck, known as the Colorado ZH2. At the same time, the Navy is working with General Motors on the ocean version of the car.
As with all automotive products, the cost of developing innovative new car structures or power sources can reach hundreds of millions of dollars, so sharing costs across multiple levels is critical to the economics of research.
Another example of military-civilian cooperation is the Joint Light Tactical Vehicle (JLTV), which the Army used to replace the Hummer, which is widely used in Iraq and Afghanistan. After considering some of the contractors’ bids, the Army awarded the contract to Wisconsin-based truck manufacturer Oshkosh.
According to reports, the joint light tactical vehicle is a fast, agile and heavy armored transport vehicle that can withstand other threats from landmines and modern warfare. Each car costs about $400,000. The Pentagon has asked for $1.1 billion in the 2018 budget, and the first combined light tactical vehicles are expected to be delivered next year.
In addition, the US Air Force is also interested in joint light tactical vehicles, and this car has numerous export opportunities. As in the case of GM, Oshkosh's design is based on its extensive civilian experience, expertise and extensive research and development funding.
Last year, Oshkosh received $6.8 billion in revenue, mostly from heavy trucks such as cement trucks and garbage collectors. Last year, Oshkosh's defense business created $1.8 billion in revenue, accounting for 26% of its total revenue.
The competition between civilian car companies and traditional military contractors is not only important for product development, but also important for cost reduction. Since military contractors tend to reduce competition through mergers, civilian companies offer much-needed competitive alternatives that can help the Pentagon achieve better pricing and efficiency.
Equally important, the auto parts industry has already experienced a merger boom, most of which has moved to offshore areas. Thousands of professional parts are required for a successful car product. For national security, the United States needs to ensure that a large number of important components are sourced locally.
In announcing the launch of the "232 investigation" of the automotive industry, Ross pointed out that the US passenger car imports increased from 32% 20 years ago to 48% last year. At the same time, employment in the US auto industry fell by 22% to about 950,000.
At present, US automakers have a small investment in R&D, and only 20% of the industry's global R&D spending comes from US automakers. This decline in the ratio has raised the question of whether the US auto industry can maintain its world-leading design and R&D status when the next generation of cars is available.
The automotive industry remains critical to the health of the civilian economy. According to the US Automotive Research Center, each job in the pickup truck factory or related powertrain factory can drive nearly 15 other jobs in the US economy.
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