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Senate GOP sounds alarm over Trump's floated auto tariffs

26 May, 2018, 05:36 | Author: Kristen Ingram
  • Trump directs government to investigate whether tariffs are needed on imports of autos, trucks

President Trump announced Wednesday that he had asked the Commerce Department to consider an investigation of automobile and auto-parts imports that could clear the way for imposing tariffs or quotas.

The White House said in a statement that the president had asked Commerce Secretary Wilbur Ross to consider whether the imports of automobiles, including trucks, and automotive parts threaten USA national security.

"Core industries such as automobiles and automotive parts are critical to our strength as a nation", Trump's statement said.

John Bozzella, chief executive of Global Automakers, a trade group representing Toyota, Nissan, Hyundai and others, said tariffs on imported vehicles would hurt American consumers. "There is little to no hope for a defensible justification of auto tariffs though the Section 232 national security process", he wrote.

"There is evidence suggesting that, for decades, imports from overseas have eroded our domestic auto industry", the secretary wrote.

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

The Trump administration has framed proposed auto tariffs, along with the levies imposed earlier this on steel and aluminum imports, as a means to ensure the vitality of key domestic industries.

Manufacturers of foreign brand autos like Toyota, Nissan and Aston Martin expressed alarm after the Wall Street Journal first reported Wednesday afternoon that the Trump administration is considering a hefty tax on imported cars to protect US national security.

The legal mechanism for the investigation "has rarely been used and traditionally has not focused on finished products", said Gloria Bergquist, spokeswoman for Auto Alliance, a group that represents foreign automakers like Volkswagen and BMW in addition to USA manufacturers like GM and Ford.

In another hint referring to trade talks with China, he said that, while the discussions were proceeding nicely, "in the end we will probably have to use a different structure". "This path leads inevitably to fewer choices and higher prices for cars and trucks in America", he said in a statement.

Trump, who is reportedly considering steep tariffs of 25 percent on imported vehicles, promised auto workers the new deal would make them "extremely happy". Formal re-negotiations between Canada, Mexico and the United States have been ongoing since last summer.

Almost half of the vehicles sold in the USA are imported, with many coming from assembly plants in Mexico and Canada. "However taxing it with trade tariffs is a threat to the economic security of millions of hardworking American families".

The threat of tariffs could also be a useful bargaining chip, as the USA tries to negotiate new trade agreements with Japan, Mexico, Canada, and the European Union.

Mexico is the top exporter of passenger vehicles and light trucks to the U.S followed by Japan, Canada, Germany and South Korea, according to the Department of Commerce. Negotiations over auto imports and manufacturing remain the biggest sticking point in the NAFTA talks.

"It's never done until the whole thing is done, but we have been making steady, consistent progress on rules of origin on cars", she said.

"The BMW Group is committed to free trade worldwide". President Donald Trump said in a tweet on Wednesday. "We are very dependent on the ability to bring in parts from other parts of the world for final production in the USA, and if that's no longer financially viable, the question becomes, is the production of vehicles in this country going to be financially viable?" He has complained about the difficulties USA carmakers face selling their products overseas, raising the subject with Asian and European allies.

United States cars sold in the European Union are hit with 10 percent duties, while the U.S. imposes just 2.5 percent on cars from the EU.

According to government statistics, in 2017 the United States imported 8.3 million vehicles worth $192bn (£144bn), and exported nearly 2 million vehicles worth $57bn (£43bn).

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