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Trump administration explores tariffs on autos, auto parts

Cars destined for export stand at Bremerhaven

 Cars destined for export stand at Bremerhaven port on March 19, 2018 in Bremerhaven, Germany.  Photo Credit: Getty Images/Alexander Koerner

The Trump administration launched an investigation into whether tariffs are needed on the imports of automobiles into the United States, moving swiftly as talks over the North American Free Trade Agreement have stalled. President Donald Trump predicted earlier that U.S. automakers and auto workers would be "very happy" with the outcome of the NAFTA talks.

The White House said in a statement Wednesday that the president had asked Commerce Secretary Wilbur Ross to consider whether the imports of automobiles, including trucks, and automotive parts threaten U.S. national security. The president said in the statement that "core industries such as automobiles and automotive parts are critical to our strength as a Nation."

The United States remains far apart on the talks over rewriting the trade pact with Canada and Mexico, with the discussions at an impasse over rules for car production. The initiation of the trade investigation could be seen as an attempt to gain leverage in the talks with the two U.S. neighbors. Treasury Secretary Steven Mnuchin has said that efforts to renegotiate the trade agreement could spill into next year.

Nearly half of the vehicles sold in the U.S. are imported, with many coming from assembly plants in Mexico and Canada. During a meeting with auto executives earlier this month, Trump said he would push for an increase in the production of vehicles built at U.S. plants. He has also criticized European Union auto imports and tariffs and earlier this year threatened a "tax" on European imports.

A person familiar with the discussions said the president has suggested seeking new tariffs of 20 to 25 percent on automobile imports. The person spoke on condition of anonymity and was not authorized to speak about private deliberations.

Trump brought a little-used weapon to his fight to protect auto workers: Section 232 of the Trade Expansion Act of 1962. The provision authorizes the president to restrict imports and impose unlimited tariffs on national security grounds.

The Trump administration used that authority in March to slap tariffs of 25 percent on imported steel and 10 percent on aluminum imports. Until then, the United States had pursued only two such investigations since joining the World Trade Organization in 1995. Both times — in a 1999 case involving oil imports and a 2001 case involving iron ore and steel imports — the Commerce Department refused to recommend sanctions.

Critics fear that other countries will retaliate or use national security as a pretext to impose trade sanctions of their own.


 

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