Trump investigation of auto imports raises fears of new tariffs

https://www.theguardian.com/us-news/2018/may/23/trump-auto-import-investigation-tariffs

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The Trump administration has launched a national security investigation into car and truck imports that could lead to new US tariffs similar to those imposed on imported steel and aluminum in March.

The commerce department said the investigation under Section 232 of the Trade Expansion Act of 1962 would investigate whether vehicle and parts imports were threatening the industry’s health and ability to research and develop new, advanced technologies.

“There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry,” the commerce secretary, Wilbur Ross, said in a statement, promising a “thorough, fair and transparent investigation”.

The move opens a new front in Trump’s “America First” trade agenda aimed at clawing back manufacturing jobs lost to overseas competitors.

In addition to the 25% tariffs on steel and 10% tariffs on aluminum, the administration has threatened tariffs on $50bn worth of Chinese goods over intellectual property complaints. It is also trying to renegotiate the North American Free Trade Agreement (Nafta) to return more auto production to the US.

Commerce said the inquiry would determine whether lost domestic production had weakened the US “internal economy” and its ability to develop connected vehicle systems, autonomous vehicles, fuel cells, electric motors and batteries, and advanced manufacturing processes.

In a separate statement, Donald Trump said: “Core industries such as automobiles and automotive parts are critical to our strength as a Nation.”

A Trump administration official said before the announcement that the expected move was aimed partly at pressuring Canada and Mexico to make concessions in talks to update Nafta that have languished in part over auto provisions, as well as pressuring Japan and the European Union, which also export large numbers of vehicles to the United States.

Earlier on Wednesday, Trump teased the announcement in a tweet: “There will be big news coming soon for our great American Autoworkers.”

At a meeting with automakers at the White House on 11 May, Trump told them he was planning to impose tariffs of 20% or 25% on some imported vehicles, sources told Reuters, and specifically criticized German automakers for exporting a large number of vehicles to the United States.

An ad hoc industry group representing the largest Japanese, German and other foreign automakers called Here for America criticized the effort.

“The US auto industry is thriving and growing,” said John Bozzella, the chief executive of Global Automakers, a trade group representing Toyota, Nissan, Hyundai and others, who also speaks for the broader group.

Bozzella noted 12m cars and trucks had been produced in the US last year. “To our knowledge, no one is asking for this protection. This path leads inevitably to fewer choices and higher prices for cars and trucks in America.”.

The German automakers Volkswagen AG, Daimler AG and BMW AG all have large US assembly plants. 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.

A Wall Street Journal report on the investigation caused US automaker shares to jump and hit those of overseas companies like Toyota, with its New York-traded shares falling 0.67%.

The United States imported 8.3m vehicles in 2017, worth $192bn, including 2.4m from Mexico, 1.8m from Canada, 1.7m from Japan, 930,000 from South Korea and 500,000 from Germany, according to US government statistics. At the same time, the United States exported nearly 2m vehicles worldwide, worth $57bn.