Trump administration weighs new tariffs on imported vehicles

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At present Trump is considering tariffs up to 25 percent.

US President Donald Trump may impose new tariffs on imported vehicles on national security grounds.

"Core industries such as automobiles and automotive parts are critical to our strength as a Nation", he said.

The Department of Commerce will investigate the effect of vehicle imports under Section 232 of the Trade Expansion Act of 1962, which allows the president to restrict trade in the name of national security.

Trump's auto tariffs, if implemented, would be similar to how the administration imposed duties on imported steel and aluminum.

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.

During recent negotiations, President Xi Jinping offered to cut the rate to 15 percent from 25 percent.

Initial reaction to the idea of an import tax on cars based on national security needs was unfriendly, with one veteran trade lawyer saying it would prompt "pant-wetting laughter - followed by retaliation" among USA trading partners.

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Japan was quick to lash out, with its trade minister Hiroshige Seko saying on Thursday that such a move would "plunge the world market into confusion" and be "extremely regrettable".

Initially, many saw this as referring to China's announcement Tuesday that it would make big reductions in its tariffs on imported cars.

In its statement announcing the inquiry, the Commerce Department cited figures showing that U.S. employment in automobile manufacturing had dropped by 22 percent from 1990 to 2017.

The tariffs on steel and aluminum imports followed a year-long investigation, so any action on auto imports could be months away.

Noting that the automobile manufacturing has always been a significant source of American technological innovation, the Department of Commerce said, this investigation will consider whether the decline of domestic automobile and automotive parts production threatens to weaken the internal economy of the United States by potentially reducing research, development, and jobs for skilled workers in connected vehicle systems, autonomous vehicles, fuel cells, electric motors and storage, advanced manufacturing processes, and other cutting-edge technologies.

He has specifically targeted Germany, and argued that American cars are slapped with higher tariffs than those imposed on European autos.

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

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