U.S. Reps. Terri Sewell (D-AL) and Fred Upton (R-MI) introduced legislation Wednesday to require the International Trade Commission (ITC) to conduct a comprehensive study on the economic importance of automotive manufacturing in America before tariffs on automobiles and auto parts could be applied.

“The President’s tariff trade policy threatens U.S. auto workers, including nearly 40,000 hardworking men and women in Alabama alone,” Sewell said. “This administration has overreached its Section 232 authority by claiming that cars and auto parts threaten American national security. An independent study by the ITC would ensure that U.S. trade policy takes into consideration its impacts on our American workers and consumers.”

“Countless jobs in Michigan and across the country depend on America’s automotive industry. We simply need to better understand the current economic wellbeing of the auto industry before any tariffs are applied that could impact those jobs,” Upton said. “This bipartisan legislation introduced today would ensure the Administration and the Congress have all of the facts as we work to secure better trade deals with our trading partners.”

Currently, Section 232 of the Trade Expansion Act of 1962 gives the president authority to apply tariffs on the import of goods or materials from other countries if those imports threaten national security. The Trump administration has proposed using Section 232 to dramatically raise tariffs on auto imports up to 25 percent.

The Automotive Jobs Act (H.R. 1710) would require the ITC to analyze, among other things:

The effect an auto plant has on the unemployment rate, per capita income, and education level in the community in which the plant is located;

The effect an automotive plant has on helping the region attract and expand non-automotive jobs and wages;

The number of component parts for automobiles that are not produced in the U.S. and would, thus, be unavailable to auto producers if prohibitively high tariffs were imposed on imports; and,

The effect of an increase in auto manufacturing costs would have on jobs in the U.S.

The legislation would require the ITC report to completed before auto tariffs can be applied.

According to the Center for Automotive Research, a 25 percent tariff on imported cars, trucks and auto parts would increase the price of an average imported vehicle by as much as $7,000; increase the cost of an average vehicle built in the U.S. by nearly $2,300; lead to the loss of up to 715,000 jobs; and cost the U.S. auto industry up to two million annual vehicle sales.

The tariffs would deal a devastating blow to Alabama, where auto manufacturers are a powerful driver of the local economy. Mercedes, Honda and Hyundai assembly plants have made the state a hub for car and light truck production.

Sewell is also a lead sponsor of the bipartisan, bicameral Trade Security Act, which would reform Section 232 to increase Congressional oversight in the Section 232 process and reassign national security threat assessments to the Department of Defense.  

Sewell and Rep. Tom Reed, R-NY, also introduced legislation on Tuesday to spur private investment in low-income rural communities and urban neighborhoods by providing tax credits for private investments made in underserved communities.

“The New Markets Tax Credit is an essential tool for revitalizing rural and urban communities across the country, and is a proven, cost-effective incentive that spurs investment in areas by providing businesses with flexible, affordable access to financing,” Sewell said. “I am confident that extending the tax credit will continue to help attract new investment in Alabama’s 7th District. New Markets Tax Credits have helped spur a number of important projects in the 7th District, including financing the Entrepreneurial Center in Birmingham and transforming the Huyck Felt brick plant into a new wood pellet manufacturing facility in Aliceville, creating 275 jobs.”

“We care about boosting jobs here in New York and across the country, but unfortunately some small businesses – the backbone of our economy – still struggle to secure a fair amount of capital to spur revitalization,” Reed said. “By creating a better environment for businesses we will see transformative projects to thrive – boosting wages, services and economic development where it’s needed most.”

The New Markets Tax Credit Extension Act of 2019 would provide private investors with a 39 percent credit against federal income taxes for investments made in some of the most distressed communities in the nation. To be eligible for New Markets Tax Credit (NMTC) financing, businesses being financed must, at a minimum, be located in designated low-income communities, defined by U.S. Census data as census tracts with a poverty rate of at least 20 percent, or with median family incomes that do not exceed 80 percent of area median income.

Currently, the NMTC is set to expire on December 31, 2019. The New Market Tax Credit Expansion Act would reauthorize and make permanent the NMTC.

While all NMTC investments benefit businesses in low-income communities, the NMTC does not target a specific type of business or sector. The NMTC places the project underwriting responsibility with community development organizations with deep ties to the communities in which they work.

Nationwide, NMTC has delivered $90 billion total project financing to over 5,000 projects, creating 1,000,000 jobs. According to the CDFI Fund, every dollar invested by the federal government in NMTC results in $8 of private investment in economically-distressed communities.