The U.S. has now delayed slapping additional tariffs on motor cars and motor car parts from the E.U. and Japan. Hanse data show that U.S. auto imports have been subject to a significant transformation since establishment of NAFTA in 1994. The E.U. and Japan had been affected quite differently.
The U.S. car import sector has seen a significant transformation since establishment of the North American Free Trade Agreement (NAFTA) in 1994 (now set to be superseded by the U.S.-Mexico-Canada Agreement (USMCA)). International auto trade has also been accompanied by significant relocations of motor car and motor car parts production to the U.S. and the emergence of new players. The shares in U.S. auto imports are therefore not representative of the distribution of U.S. car registrations by country of origin or brand.
Hanse data show that since 1994 U.S. motor car and motor car parts imports (SITC Rev. 1 7321 passenger motor cars, other than buses and 7328 Bodies and parts motor vehicles excluding motorcycles) have changed significantly. Total auto imports have declined in relative terms from 12.1 percent (US$83 billion) in 1994 in total U.S. imports to 9.7 percent (US$245 billion) in 2017. In 1994, in U.S. car imports, Canada, Japan and the E.U. had a combined share of 87.6 percent. In 2017, it was 62.4 percent. The loss was due to a decline of the shares of Japan and Canada.
Mexico increased its share in U.S. auto imports from 7.5 percent in 1994 to 21.6 percent in 2017 with the share in motor car parts increasing from 10.8 percent to 34.5 percent. Korea’s share in U.S. auto imports increased from 2.0 percent in 1994 to 8.2 percent in 2017 largely due to an increase in motor cars. China increased its share from 0.1 percent in 1994 to 4.8 percent in 2017 almost entirely due to motor car parts where its share increased from 0.5 percent to 14.9 percent.
The E.U. and Japan have performed quite differently in U.S. auto imports. While the E.U. expanded its share by 7.7 percentage points from 13.3 percent in 1994 to 21.0 percent in 2017, Japan saw its share decline 18.7 percentage points from 38.7 percent to 20.0 percent. In 2017, motor car and motor car parts represented 11.1 percent of total U.S. imports from the E.U. They represent 33.2 percent of total U.S. imports from Japan. Japan is significantly more dependent on U.S. auto imports than the E.U.
The imposition of elevated auto tariffs on the E.U. and Japan if perceived as permanent could significantly further alter the structure of U.S. auto imports. Since NAFTA, the E.U. had been among the biggest gainers in U.S. auto imports while Japan had been its biggest looser. The E.U. and Japan are therefore set to consider and respond quite differently to projected U.S. auto tariff threats.