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Potential Auto Tariffs Prompt Warnings From Industry and Allies

26 May, 2018, 00:15 | Author: Priscilla Morrison
  • President Trump as he walks to Air Force One to head to New York to attend a roundtable discussion on immigration

"There is evidence suggesting that, for decades, imports from overseas have eroded our domestic auto industry", Commerce Secretary Wilbur Ross said in a statement, according to Reuters.

Commerce Secretary Wilbur Ross said late Wednesday that following a conversation with Trump, he is launching an investigation into whether automobile imports are hurting United States national security.

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

Late last week, Japan's automakers' association urged its export partners to keep tariffs on vehicles and components low and maintain free trade relationships.

Reuters confirmed a report by the Wall Street Journal that the administration was considering launching a "Section 232" investigation into auto imports that could see tariffs of up to 25 percent imposed on imports.

"There is evidence suggesting that, for decades, imports from overseas have eroded our domestic auto industry", Ross said in a statement. On May 23, the U.S. Commerce Department opened an investigation into whether foreign countries have taken advantage of the U.S. auto sector and whether it can be protected under the national security umbrella.

The tariff threat is "perplexing" because it would make cars more expensive in the United States if imposed, said David Adams, president of Global Automakers of Canada, which represents Japanese vehicle manufacturers Honda Motor Company, Ltd. and Toyota Motor Corp.

The report caused US automaker shares to jump and hit those of overseas companies like Toyota Motor Corp., with its New York-traded shares falling 0.67 percent. Obama makes case for tighter regs on tech Trudeau on possible auto tariffs: Trump shows flimsy logic Senate GOP sounds alarm over Trump's floated auto tariffs MORE touted the benefits of the steel and aluminum tariffs on Thursday, arguing that new auto tariffs could boost US industries similarly. To stand up to legal scrutiny, the Trump administration would, at least, have to go through the motions of conducting an internal review on the impact of auto imports on national security.

"An increase in tariff barriers should be avoided", the body said, saying it had "always spoken out in favor of mutual reductions in tariffs and for free-trade agreements". "Thirteen, soon to be 14 companies, produced almost 12 million cars and trucks in America past year", he said in a statement quoted by Politico. "I am not happy with their requests", Trump said of the two countries.

Since he first appeared on the campaign trail, Trump has bemoaned the loss of auto manufacturing jobs, and promised in his State of the Union address to "get the Motor City revving its engines once again". A 1960s-era law allows the president to impose tariffs and other protectionist measures for industries deemed vital to national security.

On CTV's Question Period on May 13, Rona Ambrose, a member of Canada's NAFTA Advisory Council said a key sticking point in the talks was the auto portion of the deal, related to workers wages and rules of origin. He wants more high-paying manufacturing jobs in the United States, but his methods would raise prices for consumers, dent automaker profits and rupture supply chains manufacturers have spent decades putting in place.

"During the last 25 years, 15 new manufacturing plants have been launched in the US - resulting in the creation of an additional 50,000 direct and 350,000 indirect auto jobs throughout America - and new plants are on the way".

On Wednesday morning, Trump indicated some action is coming on autos, although it was unclear whether he was referring to ongoing talks with China, NAFTA negotiations with Canada and Mexico or something else. A year ago the US imported over 8 million vehicles from Canada, Mexico, Japan, South Korea and Germany.

"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.

U.S. President Donald Trump is taking aim at Canada, calling his neighbour to the north "very hard to deal with" and "very spoiled".



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