White House delays decision on tariffs on imported cars, parts

Donald Trump reportedly agreed with findings from a Commerce Department study that stated some imported cars and trucks could threaten national security. (AFP pic)

WASHINGTON: The White House said on Friday that President Donald Trump is delaying a decision for as long as six months on whether to impose tariffs on imported cars and parts to allow for more time for trade talks with the European Union and Japan.

It said, however, Trump agreed with findings that imported vehicles and parts can threaten US national security, a designation likely to anger some US allies.

The decision, at least for now, averts what was shaping up to be a new dramatic escalation in the Trump administration’s trade disputes around the world, including a trade war with China.

It was not clear what steps Japan and the European Union (EU) would be willing to take to stem vehicle and auto parts exports.

Trump had faced a Saturday deadline to make a decision on recommendations by the Commerce Department to protect the US auto industry from imports on national security grounds and imposing tariffs of up to 25%.

Trump directed US Trade Representative Robert Lighthizer to pursue negotiations with the EU, Japan and any other country he deemed appropriate and report back within 180 days.

If no deal is reached, Trump will decide by then “whether and what further action needs to be taken.”

In a proclamation released Friday, Trump said he agreed with a Commerce Department study that found some imported cars and trucks are “weakening our internal economy” and threaten to harm national security.

Automakers warned the tariffs cost hundreds of thousands of auto jobs, dramatically raise prices on vehicles and threaten industry spending on self-driving cars.

The Alliance of Automobile Manufacturers, a trade group representing General Motors Co, Volkswagen AG, Toyota Motor Corp and others, said the companies remained “deeply concerned that the administration continues to consider imposing auto tariffs.”

The group said that since 2017 automakers have invested US$22.8 billion in new and existing facilities in the United States, but “increased auto tariffs threaten to undo this economic progress. At the end of the day, you can have tariffs or investment, but you can’t have both.”

A revised US trade deal with Mexico and Canada signed in November effectively shields existing imports from the two nations to the United States from national security tariffs.

The auto tariffs face strong opposition in Congress, including from many prominent Republicans. The White House has refused to release the auto import study to Congress.

Trump’s proclamation said “domestic conditions of competition must be improved by reducing imports” and said a strong US auto sector is vital to US military superiority.

The reports cited statistics that US-owned companies’ share of the US automobile market has declined from 67%, or 10.5 million units produced and sold in the United States, in 1985, to 22%, or 3.7 million units produced and sold in the United States, in 2017.

At the same time, the Commerce Department report stated that imports nearly doubled – from 4.6 million units to 8.3 million units.

US Commerce Secretary Wilbur Ross told Trump that “successful negotiations could allow American-owned automobile producers to achieve long-term economic viability and increase R&D (research and development) spending to develop cutting-edge technologies that are critical to the defence industry.”

The report called the European Union and Japan “protected foreign markets” that “impose significant barriers to automotive imports from the United States, severely disadvantaging American-owned producers.”

The United States also has barriers to imports, most notably a 25% tariff on pickup trucks from outside North America.