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Federal Register / Vol. 86, No. 213 / Monday, November 8, 2021 / Notices
lotter on DSK11XQN23PROD with NOTICES2

now 2:1, a record high. In addition, while approximately one quarter of the automobiles on the road are less than four years old, the average age of automobiles in the United States increased from 8.4 years in 1995 to 11.6
years in 2016,235 and the tendency of consumers to keep automobiles longer has negatively impacted demand. This has caused the gap between new and used automobile prices to reach record highs. Sales peaked in 2016 at 17.5
million units, but declined to 17.1
million units in 2017, and remained at roughly the same level in 2018. A
further decline in demand is expected in 2019, with interest rates projected to rise and recent reports indicating that $56.8 billion in auto loans are delinquent.236 Equally as important, exports to foreign markets are unlikely to provide avenues for additional sales and revenue as tariff and non-tariff barriers to entry discourage U.S.
automotive exports and the U.S. dollar remains strong relative to Europe, Japan, and China. Finally, employment in the automotive sector remains significantly below the industrys employment peak in 2000, impacting the ability to maintain a highly skilled workforce that is essential for national security needs.
Defense purchases alone are not sufficient to support a robust military vehicle supply chain and R&D in key automotive technologies such as autonomous driving, vehicle lightweighting, electrification, and connectivity that are vital to meeting the needs of national defense. To be available to meet national defense needs, American-owned 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 ensure that the United 235 U.S. Department of Transportation, Bureau of Transportation Statistics, https www.bts.gov/
content/average-age-automobiles-and-trucksoperation-united-states.
236 David Harrison, Auto Borrowing Rises as New Mortgage Loans Sag, New York Fed Says, Wall Street Journal, Feb. 12, 2019, https www.wsj.com/
articles/auto-borrowing-rises-as-new-mortgageloans-sag-new-york-fed-says-11549988807?
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States maintains the ability to produce cutting-edge technologies that are essential to Americas national security.
The many factors listed in this report form 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.
VIII. Recommendation 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.
Or 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.
Or 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
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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.
Automobiles and Automobile Parts Subject to Tariffs Described Above Electrical Components & Parts:
8414308030; 8414596040;
8414596540; 8414598040;
8415830040; 8507100060;
8507304000; 8507404000;
8507600010; 8507904000;
8511200000; 8511300040;
8511300080; 8511400000;
8511500000; 8511802000;
8512202040; 8512204000;
8512204040; 8512300020;
8512300030; 8512404000;
8525201500; 8525206020;
8525209020; 8525601010;
8527211015; 8527211020;
8527211025; 8527211030;
8527211500; 8527212510;
8527212525; 8527214000;
8527214040; 8527214080;
8527214800; 8527290020;
8527290040; 8527290060;
8527294000; 8527298000;
8527298020; 8527298060;

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