News / Metals tariff rocks auto industry, and Trump smiles on bribes in foreign deals

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While yesterday’s announcement of 25% tariffs on steel and aluminium imports to the US took most column inches, the world of logistics could also be impacted by a less-publicised executive order which could open the door to bribery in foreign deals. 

The order, which pauses enforcement of the Foreign Corrupt Practices Act (FCPA) – which could support accused businesses retrospectively – suggests banning bribery has harmed the US. 

“American national security depends in substantial part on the United States and its companies gaining strategic business advantages, whether in critical minerals, deepwater ports, or other key infrastructure or assets,’ it says. 

“But over-expansive and unpredictable FCPA enforcement against American citizens and businesses — by our own government — for routine business practices in other nations not only wastes limited prosecutorial resources that could be dedicated to preserving American freedoms, but actively harms American economic competitiveness and, therefore, national security.

“It is therefore the policy of my administration to preserve the presidential authority to conduct foreign affairs and advance American economic and national security by eliminating excessive barriers to American commerce abroad.” 

The order states there will be a review period of 180 days, during which there will be no new FCPA investigations, all existing investigations will be reviewed, and policies updated, “as appropriate”, to ensure “American competitiveness”.

The period could be extended for a further 180 days. Existing and past enforcement actions will then be reconsidered. 

“It’s just so unfair that American companies aren’t allowed to pay bribes to get business overseas,” Mr Trump was reported as saying in 2020. 

Jason Miller, supply chain professor at Michigan State University, noted on social media; “Maybe the thought is that bribes will compensate for all the retaliatory tariffs the US is about to get placed in its exports, thanks to POTUS’s tariff fixation?”

He added: “I was brought up with the idea of the United States as a ‘shining city on a hill’, to quote Ronald Reagan. Stopping enforcement of anti-bribery laws is a step backward. The damage to US moral authority far outweighs any overseas business that could possibly be won by such actions.” 

Most of the world, however, is still reeling from the decision to impose 25% tariffs on steel and aluminium imports. Countries are now looking at ways to react; as with previous tariff statements, there is a negotiation to be had. 

The executive order notes: “should the United States and [any] country arrive at a satisfactory alternative means to address the threat to the national security, such that the president determines that imports from that country no longer threaten to impair the national security, I may remove or modify the restriction on steel articles imports from that country and, if necessary, adjust the tariff as it applies to other countries…”

The 2018 tariffs were applied to raw materials, but now include imported parts critical to other industries, in particular the automotive sector. 

About 25% of the steel used in the US is imported, with Canada, Brazil and Mexico the top exporters, followed by South Korea and Vietnam. Mexico and Canada accounted for about 40% of US steel imports last year.

And nearly half the aluminium used in the US is imported, Canada accounting for 79% of that, with Mexico again another major supplier.

Alix Partners said the tariffs, to be introduced next month, would add $400 to $500 on to the price of a $48,000 car. 

John Manners-Bell, CEO of consultant and analyst Ti, told The Loadstar: “As steel is such a major component (around a fifth) of the cost of manufacturing vehicles, the new tariffs will inevitably mean higher prices for US automotive manufacturers.

“Tariffs are a form of taxation, and taxation affects demand, so the impact will either be felt in terms of lower sales of vehicles or lower profitability, although President Trump has promised more tax cuts, which may balance the equation.” 

But the tariffs could also lead to retaliation. EU president Ursula von der Leyen said: “I deeply regret the US decision to impose tariffs on European steel and aluminium exports. Tariffs are taxes – bad for business, worse for consumers. Unjustified tariffs on the EU will not go unanswered, they will trigger firm and proportionate countermeasures.

“The EU will act to safeguard its economic interests. We will protect our workers, businesses, and consumers.” 

The end result could be higher prices globally, or a decline in automotive global trade – with an inevitable impact on logistics.