Trump administration considers tariff on cars

Donald Trump on Wednesday blasted Canada and Mexico for being 'difficult' during NAFTA talks

Trump directs government to investigate whether tariffs are needed on imports of autos, trucks

Canada and Mexico are already locked in tortuous negotiations with the Trump administration to revamp the North American Free Trade Agreement that links the three countries.

The New York Times reported Monday that China's Finance Ministry cut tariffs on imported cars to 15 percent of wholesale value, which represents a 10 percent improvement. So what's behind the move?

The United States will decide by June 1 whether to impose steel and aluminum tariffs on European Union imports, something which has moved trans-Atlantic relations to the brink of a trade war.

But the auto tariffs are also aimed at something else, experts say.

"His tactics so far in dealing with any country, and in particular with Canada, has been to use bullying tactics, and we've got to stand up to a bully".

Who makes the cars Americans drive?

.

"This isn't about national security", Thomas Donohue, president and CEO of the U.S. Chamber of Commerce, said in a statement.

"President [Donald] Trump needs to stop playing games and start supporting the American economy with positive action".

VDA noted that actual trade flows in the auto industry are different to the impression given in policy statements by Trump.

In 2017, Mexico accounted for the largest share of imports of new passenger vehicles into the USA, at 24 percent.

Last year, the US imported $43 billion worth of cars from Canada, $39 billion from Japan, $30 billion from Mexico, $21 billion from Germany, $16 billion from South Korea and additional amounts from other suppliers. Other countries made up the rest, according to the U.S. Commerce Department.

Trump directs government to investigate whether tariffs are needed on imports of autos, trucks

A vehicles tariff also would hurt US automakers with operations in Mexico and Canada.and other places The United States imported $192 billion in passenger vehicles a year ago, with Mexico the leading source, followed by Canada, Japan and Germany. "This course of action will undermine the health and competitiveness of the US auto industry".

Nearly 1 million U.S.jobs are tied directly to auto and parts manufacturing, according to the U.S. Bureau of Labor Statistics. US auto sales fell 2 percent a year ago after hitting a record high in 2016.

Those indicators do not suggest an industry in need of protection.

He also predicted that American auto workers "are going to be extremely happy" with what emerges.

Commerce said the inquiry would determine whether lost domestic production had weakened the United States "internal economy" and its ability to develop connected vehicle systems, autonomous vehicles, fuel cells, electric motors and batteries, and advanced manufacturing processes. "I appreciate that we're looking into tariffs, but I'm cautious".

In this Reuters interview clip Prime Minister Justin Trudeau reacts to U.S. President Donald Trump's decision to investigate whether foreign cars have hurt the U.S. auto industry and/or undermined American national security.

"The Honda Accord is not a threat to our national security".

Not so, some analysts say. Renault (RENA.PA), exposed to the USA market via its 43.4 percent stake in Nissan (7201.T), fell 1.7 percent.

Trump - whose protectionist platform helped launch him to the White House - has repeatedly floated the notion of steep tariffs that would shield the U.S. auto industry.

If Trump chooses to move ahead with the tariffs, the protectionist maneuver may help energize his working-class base before November's midterm elections and turn them out to vote in key Senate races.

"The Trump administration now adding new threats with tariffs on European cars could make things a lot worse".

Latest News