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1001 Pennsylvania Avenue, NW, Washington, DC 20004-2595  p202 624-2500  f202 628-5116

October 9, 2018 

VIA ELECTRONIC FILING SUPPLEM ENTAL NARRATIVE

The Honorable Robert E. Lighthizer Docket. No.: USTR-2018-0025 

United States Trade Representative 

Office of the United States Trade Representative 600 

17th St. NW 

Washington, DC 20508 

Re: Niss an North America’s Re quest for Exclusion from Section 301 Tariffs for OEM 

and Re placement Auto Parts

Dear Ambassador Lighthizer: 

On behalf of Nissan North America, Inc. (“Nissan”), we hereby submit our requests to 

exclude certain OEM and replacement parts from the tariffs enacted pursuant to Section 301 of the

Trade Act of 1974 (19 U.S.C. § 2411). These products are not economically and commercially 

available outside of China, are not products benefiting from the “Made in China 2025” program, and 

the imposition of additional duties on these products would significantly undermine Nissan’s 

competitive advantage in the U.S. and global markets, while providing no beneficial impact to a U.S. 

entity. For these reasons, Nissan respectfully requests that products discussed below be excluded 

from the Section 301 tariffs. 
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1. Background

Nissan North America is a leading manufacturer of automobiles and auto parts in the 

U.S. Headquartered in Franklin, Tennessee, Nissan’s operations include automotive styling, 

engineering, and manufacturing throughout the country. Nissan maintains manufacturing facilities in 

the U.S. for the production of core-models: vehicle manufacturing plants in Smyrna, Tennessee and 

Canton, Mississippi, and two powertrain plants in Decherd, Tennessee. These facilities have a

combined production capacity of 1,090,000 vehicles and 1,500,000 powertrains annually. Nissan’s 

Smyrna Vehicle Assembly Plant was the largest producing automotive assembly plant in North 

America in 2017. Since 1981, Nissan has invested $11.8 billion into manufacturing in the U.S., and 

it currently employs over 22,000 U.S. workers. We purchased $13 billion worth of U.S. parts and 

materials in 2017, by partnering with more than 500 local suppliers in 30 states. 

While Section 301 tariffs harm Nissan, they provide no benefits to the U.S. economy. A 

typical automobile is comprised of 15,000 parts, from engines and transmissions to electronic

sensors, dashboard components, tires, and windshield wiper motors. Integrated supply cha ins that

use domestic and imported parts are essential for Nissan’s auto production and disruption of that

complex supply chain would have an adverse impact on Nissan’s U.S. operations. 

2. Additional Tariffs Will Increase Costs and Impede Nissan’s Ability to 

Compete on an International Scale

Nissan operates in the global automotive industry where competitors outside the United 

States use similar parts and manufacturing/assembly processes. We compete on the basis of 

innovation, design, reliability and efficiency. Supplemental duties imposed on component parts 

produced outside the United States will create a competitive disadvantage for U.S. automobile

producers in the global market. Non-U.S. producers will be able to export finished vehicles to 
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United States and emerging markets by using components without tariffs, while directly

competing with U.S.-produced automobiles that incorporate imported parts w it h supple mental 

tariffs. When Nissan sells U.S.- produced vehicles in the U.S. and other countries, Nissan will do so 

with a higher cost structure than its competitors producing outside the United States, resulting in a

competitive disadvantage to Nissan in the United States and in export markets. In turn, this will

increase the incentive to move production out of the Unite d States in order to remain 

competitive in the global market. 

3. Production of Subject Auto Components Are Conce ntrated in China

The auto parts industry is large and diverse, with imported products ranging from simple parts 

such as windshield wiper blades to complex units such as engines. Automobile part manufacturers 

are generally classified into tiers. Tier 1 manufacturers produce components and systems for new 

vehicles, using parts furnished by Tier 2 and 3 suppliers. Tire 2 and 3 manufacturers typically focus 

on discreet sub- products, such as gaskets or valves. 

The U.S. auto parts industry is primarily in the Tier 1 segment and approximately two-thirds 

of parts sold domestically are sourced from suppliers located in the United States. An estimated

70% of the value originates with Tier 1 suppliers. 1 Conversely, Tier 3 part suppliers are 

concentrated in China, with China specializing in parts with lower value-added such as jacks, knobs, 

lights, rearview mirrors, and exhaust manifolds. 2

Nissan imports some Tier 3 parts from China and incorporates them into more complex 

components and automobiles that are produced in the U.S. 

1 See CRS Report for Congress, US-Chinese Motor Vehicle Trade: Overview and Issues (August 2013). 2 Id.
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The components at issue are destined to fulfil Nissan’s demand for service parts for older 

local or import mode ls. Nissan has the responsibility to proc ure service beyond the norma l

productions life cycle and retooling a new supplier for replacement parts for an older mode l year 

would be cost prohibitive as substantial tools and R&D costs would be incurred to set up a new 

supplier of low-volume replacement parts. 

4. The Automotive OEM Qualification Re quires an Extended Transition Time When 

Changing Suppliers

Changing suppliers to mitigate the tariff impact is not a viable option for Nissan. One of the

automotive industry’s most widely used international standards for quality management is ISO/TS 

16949. An ISO/TS 16949 certification is required for vendors suppling materials and components to

the automotive industry.3 As a result, the universe of potential alternate suppliers is limited to those

suppliers with existing ISO/TS 16949 certifications. The process for ISO/TS 16949 certification is at

least one year, and more typically 2 years. In the absence of a ISO/TS 16949 certification, Nissan is 

generally unable to purchase from a supplier. Given the extended period to identify and certify new 

suppliers, simply changing its supply base to reduce the impact of the 301 Tariffs is not possible.

Beyond ISO/TS 16949, all raw materials and components incorporated into Nissan vehic les 

undergo a rigorous selection and approva l process. First, part and material de velopment requires 

several months of research and development. The development process is f ollowed by the

qualification process which takes place between Nissan and its suppliers to ensure the properties 

meet Nissan’s requirements. Nissan can only introduce the parts into the vehicle after the part has 

completed the qualification process.

3 As from September 2018, ISO/TS 16949:2009 will become IATF 16949:2016, see, e.g.,

https:/ /isosafe.com.au/b log// how-to-quic kly -migrate-fro m-is ots-169492009-to-ia tf-16949 and 

http://www.sgs.com/en/news/2016/ 06/transition-to-the-new-iso-ts-16949-2016-s tandard-wit h-sgs.
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The qualification process is lengthy and arduous with complicated steps involved. It begins 

with the co-development of a new component with a proposed supplier. It then follows with testing 

and developing samples which requires significant technical requests. Nissan then develops material

performance requirements, validates the performance of the material, reviews the qualification 

results, and approves the supplier’s part to be used in OEM production. While the qua lification 

process varies by component, the qualification timeframe ranges from 12 to 20 months. The chart

below illustrates a typical qualification cycle in the automotive industry: 
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5. The Subject Compone nts Are Not Strate gically Important or Relate d to “Made

in China 2025” or Othe r Chine se Industrial Programs

The Section 301 tariffs are specifically designed to protect U.S. manufacturers from the

impact of the Chinese government’s China 2025 pla n. To the best of Nissan’s understanding, none

of the Nissan imported products supports the China 2025 efforts. China’s polices in the automotive

sector are limited to the production of new energy vehicles such as electric and fuel cell ve hic les, 

and components dedicated to those vehicles. This includes developing engines, automatic

transmission assemblies, batteries, electric motors, sensors, and electronic fuel cells for electric and 

fuel cell vehicles. The “Made in China 2025” is specifically limited to the following automotive

parts: 

High-efficiency internal combustion engine: Passenger car gasoline engine thermal

efficiency ≥ 40% with domestic component rate of 40%. Heavy commercial vehicle 

diesel engine thermal efficiency ≥52% with domestic component rate of 60%. 

Key components for high-efficiency internal combustion engine: Breaking through 

the technology of variable valve, variable compression ratio, pressurization, and 

efficiency of post-processing, with a goal of reaching the market share of 35%;

Breaking through the technology of 250 bar gasoline injection and 2000 bar or 

above diesel injection, with a goal of reaching the market share at 15%; Breaking 

through the waste recovery technology. 

Electronic control system: The engine and transmission electronic control system. 

The domestic market shares of domestic core controllers shall reach to 20%; key

sensors shall reach to 80%; hybrid core controllers shall reach to 80%; the chips for 

controllers shall reach to 30%; and the application of independent real-time operating 

system shall reach to 50%. 

Hybrid motor/battery/special engine: Passenger car -- 20s effective specific power ≥ 

4kW / kg; commercial vehic le -- 30s effective ratio torque ≥ 19Nm / kg; the battery 

cell power exceeding 8kW / kg; inverter power density exceeding 20kW / L with an 

efficient, and highly reliable special engine for hybrids. 

Medium and low voltage assist and energy recovery technology: The market share of 

domestic parts reach to 30%, with a goal of reduc ing the battery cost to 3.6 yuan/Wh, 

and achieving the integrated power unit power density ≥11kW/L (including heat 

sink). 
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Efficient automatic transmission: Breaking through the key technologies of dua l

clutc h automatic transmission (DCT), continuously variable transmission (CVT), 

automatic transmission (AT) above 6 speeds, mechanical automatic transmission 

(AMT), etc., and achieving industria lization with a goa l of reaching for more tha n 

40% of the market share. 

Key components for automatic transmission: Breaking through the technology for 

clutc h assembly, high-pressure silent oil pump, electro-hydraulic coupling hydraulic

valve body, and hydra ulic torque converter, and achieving industria lization with a

goal of reaching for more than 40% of the market share of the key components. 

Lightweight parts: Lightwe ight parts suc h as steel/aluminum hybrids, 

aluminum/fiber, and carbon fiber bodies with a goa l of reaching to 20% of the

market. Application of lightweight technology on body, body closures, wheels, 

subframes, transmission housings, brakes, wiring harnesses, wire controls and more. 

Low rolling resistance tire: Improving the wet-slip, wear and noise performance of 

domestic energy-saving tires, reduc ing the rolling resistance by 30% , and reduc ing 

the fuel over 6%. The goal is to reach for more than 50% of the market share. 

None of the component parts imported by Nissan are part of the industries identified above. 

Fina lly, the 301 duties seek to remedy coerced technology transfers via limited joint-venture

partnerships. This consideration is inapplicable to the parts at issue because the Chinese

government permits foreign auto parts companies to own more than 50% of a Chinese parts 

producer. Many U.S.-based parts producers have also established operations there such as Delphi, 

Visteon, Johnson Controls, Lear, Arvin Meritor, and TRW, along with other leading foreign 

producers such as Bosch, Denso, Magna , and Yazaki. Indeed, seven of China’s 10 largest parts 

manufacturers are foreign-based. Moreover, Nissan has measures to safeguard its proprietary 

manufacturing and technology information. Our suppliers have not benefited from the Chinese

Government’s acts, policies or practices identified by the USTR as being unreasonable or 

discriminatory and that burden or restrict U.S. commerce. To the contrary, our suppliers increase 

U.S. commerce by complementing U.S. operations. Therefore, the technology transfer issues 

identified by the USTR are inapplicable to the parts imports by Nissan. 
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* * * * * * * 

Re quest for Confidential Treatment

Nissan hereby requests business confidential treatment for certain information identified in brackets in 

the comments above. Nissan certifies that the data include, inter alia, business trade secrets, 

commercial or financial information and certain other information, the disclosure of which would 

endanger trade secrets or profitability, and that the information would not customarily be released to 

the public. Nevertheless, Nissan has provided a public version of this submission which can be placed 

in the public file for inspection. 
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CONFIDENTIAL DOCUMENT

---NOT FOR PUBLIC RELEASE---

Attachment 1 

Specification She et
THIS DOCUMENT IS NOT SUSCEPTIBLE TO PUBLIC SUMMARY
Part number: See attachment 1

Description BOOSTER ASSY-BRAKE

8413500080

These component(s) at issue are service parts for older local or import models. Retooling a new supplier 

for replacement parts for an older model year would be cost prohibitive as substantial tools and R&D 

costs would be incurred to set up a new supplier of low-volume replacement parts.
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