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Federal Register / Vol. 86, No. 213 / Monday, November 8, 2021 / Notices automotive technologies such as autonomous driving, vehicle lightweighting, electrification, and connectivity vital to meeting the needs of national defense. Hence, Americanowned automobile and automobile parts manufacturers must have a robust presence in the U.S. commercial market.
Moreover, innovations generated by R&D investments are necessary for manufacturers to remain competitive in both the commercial automotive sector and the defense sector. It is that innovation capability which is now at serious risk as imports continue to displace American-owned production.
An American-owned automotive industry that is not competitive in the latest technologies, nor has the ability to retain a large skilled workforce and attract the next-generation workforce, will be unable to remain globally competitive and ensure that the United States maintains the ability to produce cutting-edge technologies that are essential to Americas national security.
The foregoing factors explain the basis for the Secretarys determination that the displacement of domestic products by excessive importsin particular the displacement of automobiles and certain automobile parts manufactured by American-owned firmsis causing a weakening of our internal economy that may impair the national security.
See 19 U.S.C. 1862d. Therefore, the Secretary recommends that the President take corrective action. See 19
U.S.C. 1862c.
The Secretary recommends the following actions the President could take as possible options to remove the threatened impairment of the national security:
1. Direct further discussions and negotiations to obtain agreements that address the threatened impairment of national security. Since this investigation was initiated, there have been productive discussions that could result in positive changes for the automotive industry in the United States, and the United States has signed the USMCA. If these discussions and the USMCA result in positive changes to the U.S. automotive industry, the President could determine whether those actions address the threatened impairment of the national security found in this report.
As provided in section 232c3, if appropriate agreements have not been reached in a timely manner or if a negotiated agreement is not being carried out, the President could determine that further action under section 232 is necessary.

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II. Legal Framework
2. Impose tariffs of up to 25 percent in addition to any existing duties on imports of automobiles and certain automobile parts engines and parts, transmissions and powertrain parts, and electrical components in order to increase U.S. production of automobiles and parts to a level sufficient to generate additional revenue to increase R&D
investments by American-owned as well as foreign-owned manufacturers in the United States. Imports under USMCA Side Letters would not be subject to the tariffs.

A. Section 232 Requirements Section 232 provides the Secretary with the authority to conduct investigations to determine the effect of imports of any article on the national security of the United States. It authorizes the Secretary to conduct an investigation if requested by the head of any department or agency, upon application of an interested party, or upon his own motion. See 19 U.S.C.
1862b1A.
Section 232 directs the Secretary to submit to the President a report with recommendations for action or inaction under this section and requires the Secretary to advise the President if an article that is the subject of the investigation is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security. See 19 U.S.C. 1862b3A.
Section 232d directs the Secretary and the President to, in light of the requirements of national security and without excluding other relevant factors, give consideration to domestic production needed for projected national defense requirements; the capacity of domestic industries to meet such requirements; existing and anticipated availabilities of the human resources, products, raw materials, and other supplies and services essential to the national defense; the requirements of growth of such industries and such supplies and services including the investment, exploration, and development necessary to assure such growth; and the importation of goods in terms of their quantities, availabilities, character, and use as those affect such industries and the capacity of the United States to meet national security requirements. See 19 U.S.C. 1862d.
Section 232d also directs the Secretary and the President in the administration of this section to further recognize the close relation of the economic welfare of the Nation to our national security, and . . . take into consideration the impact of foreign competition on the economic welfare of individual domestic industries and any substantial unemployment, decrease in revenues of government, loss of skills or investment, or other serious effects resulting from the displacement of any domestic products by excessive imports . . . or other factors in determining whether such weakening of our internal economy may impair the national security. See 19
U.S.C. 1862d.
Once an investigation has been initiated, Section 232 mandates that the
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3. Impose tariffs of up to 35 percent in addition to any existing duties on imports of SUVs and CUVs, which will increase domestic production and generate additional revenue to increase R&D investments by American-owned and foreign-owned manufacturers in the United States. The Department of Commerce would work with the U.S.
Customs and Border Protection on the most appropriate means to implement this option if selected. Imports under USMCA Side Letters would not be subject to the tariffs.
Exemptions The President may wish to consider agreements that the United States has renegotiated recently in determining whether specific countries should be exempted from the proposed tariffs based on an overriding national security interest of the United States. For example, the President should consider the Republic of South Korea for an exemption based on the recently improved agreement and strong national security relationship. The Secretary recommends that any determination to exempt a specific country should be made at the outset and a corresponding adjustment be made to the final tariffs imposed on the remaining countries.
Any country exempted should be placed under a quota to ensure that producers in that country do not increase exports to the United States and to prevent transshipment through that country of automobiles and automobile parts seeking to avoid tariffs. This would ensure that overall imports of automobiles and automobile parts to the United States remain at or below the level needed to enable American-owned producers to reach levels of production sufficient to increase R&D for technologies that are important to national defense.

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