Treasury must support nation’s struggling auto industry, say Scott, GOP colleagues

As auto dealerships struggle with inflation and inventory shortages amid ongoing supply chain disruptions, U.S. Sen. Tim Scott (R-SC) and his Republican colleagues requested that the U.S. Treasury Department use its existing authority to provide America’s automobile industry with some temporary relief.

Specifically, the lawmakers expressed concerns that the Treasury Department hasn’t yet used its authority to provide the last-in, first-out (LIFO) method of inventory accounting for the needed relief. 

“Treasury’s inaction comes despite the unprecedented pandemic-related interruption of global supply chains that is severely curtailing vehicle production due to the ongoing shortage of semiconductors,” wrote Sen. Scott and his colleagues in a Feb. 18 letter sent to Treasury Secretary Janet Yellen.

Among the lawmakers who joined Sen. Scott in signing the letter were U.S. Sens. John Thune (R-SD), Marsha Blackburn (R-TN), Richard Burr (R-NC), Rob Portman (R-OH), Thom Tillis (R-NC), Shelley Moore Capito (R-W.), Steve Daines (R-MT), Bill Cassidy (R-LA), Jerry Moran (R-KS), Mike Rounds (R-SD), Todd Young (R-IN), Roger Wicker (R-MS), Joni Ernst (R-IA), Roy Blunt (R-MO), and John Hoeven (R-ND).

They cited a report from the Alliance for Automotive Innovation provided to the Treasury Department showing that U.S. auto retailers’ inability to replenish inventory, coupled with the current threat of LIFO recapture, is directly a result of the foreign disruption in the global supply chain caused by activities related to the pandemic, especially regarding semiconductor shortages, according to their letter.

“However, under Treasury’s current interpretation, the supply chain shortage of an essential component of a larger product does not satisfy the ‘major foreign trade interruption’ requirement,” they wrote. “We strongly urge you to reconsider this interpretation.”

Sen. Scott and his colleagues noted that to require absolute sourcing to a single origin is inconsistent with modern commerce, including automobile production. 

“We share the same goal of a strong economic recovery and look forward to working with you to help resolve the LIFO recapture problem,” they wrote. “However, without prompt regulatory action, we fear significant harms for auto retailers, auto jobs and auto communities.”