Trump considering 25 pct tariffs on vehicle imports

Friday, 25 May, 2018

The Trump administration confirmed on Wednesday that it may slap tariffs on imported vehicles and automotive parts, pending the outcome of an investigation by the Department of Commerce.

Section 232 is the same statute that was invoked to allow the administration's tariffs on steel and aluminium imports.

The president's latest gambit is a threat of major tariffs against foreign vehicle manufacturers, after he directed Commerce Secretary Wilbur Ross Wednesday to conduct a Section 232 investigation into whether foreign competition in the auto sector represents a threat to national security risk.

In the realease Trump added that "core industries such as automobiles and automotive parts are critical to our strength as a Nation".

The president commented on the negotiations as he left the White House for a series of events in New York City.

That was after starting the day with a tweet suggesting that "there will be big news coming soon for our great American autoworkers. After many decades of losing your jobs to other countries, you have waited long enough!"

Mr. Trump has framed the threat of tariffs as a potential source of leverage in talks to rewrite the North American Free Trade Agreement, which have largely stalled over rules governing how carmakers can qualify for Nafta's zero tariffs.

Further dampening the effect of the announcement is simply the time that it will take for the Commerce to build a Section 232 case for tariffs on auto imports. The United States is the second-biggest export destination for German auto manufacturers after China, while vehicles and car parts are Germany's biggest source of export income.

The auto industry has been a focus of the president.

Trump has railed against European auto imports and tariffs on Twitter before. Trump has long opposed the current NAFTA terms and has made it a point of his presidency to re-work the deal.

Despite his criticism of the United States for arguing that auto imports might be a national security issue, Trudeau defended Canada's decision to block a proposed C$1.51 billion ($1.18 billion) takeover of construction company Aecon by a Chinese state builder, also on national security grounds.

The biggest exporters of new passenger vehicles and light trucks to the United States a year ago were Mexico, Canada, Japan, Germany and South Korea, according to USA government figures.

"Maybe other countries were in mind when the president was contemplating that but the reality is the two largest importers into the United States are Canada and Mexico", he said.

William Reinsch, a former Clinton administration trade official, said the proposal broke with traditional legal interpretations andwould disrupt industry supply chains and probably lead to job losses in the United States and elsewhere. "I am not happy with their requests but I will tell you, in the end we win, we will win and we'll win big". Last week, the top USA trade official said the three countries were "nowhere close to a deal".

The three countries have been locked in NAFTA renegotiations for months and Trump said his trading partners have been "very spoiled" and said: "What they've asked for is not fair".

That could impact NAFTA negotiations insofar as it could bolster USA demands that vehicles must have greater American and North American content to be eligible for duty-free status under the trade pact. Canada rejects any idea it could be a threat to the United States.