Trade Cases

Trump Renews Auto Tariff Threat

Written by Sandy Williams

Commerce Secretary Wilbur Ross says that tariffs on imports of autos and parts are still on the table, refuting claims that the deadline has passed to impose such measures under Section 232.

After Commerce delivered its report on the national security implications of imports of foreign autos to the administration, the president had 180 days to act on the auto tariffs. Since no action was taken, members of Congress and trade analysts contend that the measure is no longer valid. Ross counters that people “simply don’t understand Section 232.”

“What was needed in November was for the president to decide on a path forward. He did — he decided the path forward was to negotiate as long as that was bearing fruit. The November deadline was ‘an imaginary deadline,’” said Ross in an interview with Bloomberg at the World Economic Forum in Davos. “The deadline was that he would take a decision – he took a decision. Period.”

“We have a perfect justification to put tariffs on if we wish to; the president decided it was better to negotiate,” Ross said Thursday. “We’ve had constructive negotiations with the German car manufacturers, with the Koreans and with the Japanese. So far we haven’t felt the need to do it. But if people do silly things, if they do protectionist and discriminatory things, like pillar one of the digital-services tax, we’re obviously going to respond.”

At Davos, President Trump doubled down on his threat to impose auto tariffs on Europe. “We expect to be able to make a deal with Europe. And if they don’t make a deal, we’ll certainly give that very strong consideration,” Trump said.

“Ultimately it will be very easy because if we can’t make a deal, we’ll have to put 25 percent tariffs on their cars,” Trump told Fox Business in an interview.

Treasury Secretary Steven Mnuchin, during a discussion on digital service taxes, commented, “If people want to just arbitrarily put taxes on our digital companies, we will consider arbitrarily putting taxes on car companies.”

His use of “arbitrary” seemed to undercut what Ross has emphasized is an action necessary to protect national security. Some have claimed that the White House has “weaponized” tariffs to bully its way through trade and policy negotiations. 

A recent example of such weaponizing was exposed by the Washington Post on Jan. 15. The Trump administration shocked Germany, France and Britain by threatening auto tariffs if the countries did not formally accuse Iran of violating the 2015 nuclear agreement. According to the Post, the three nations had planned to rebuke Iran anyway, but kept the threat from the U.S. secret to avoid looking weak.

The Trump administration has refused to release the Commerce report that purportedly shows that auto imports threaten the national security of the U.S., citing executive privilege, despite Congress demanding it do so in a provision passed in a spending bill last year. 

“Releasing it now would interfere with the president’s ability to protect confidential executive branch communications and could interfere with ongoing negotiations,” said a spokesperson for the Commerce Department. The decision to withhold the report from Congress and the public was supported by the Justice Department.

Said the Justice Department in its decision, “The President may direct the Secretary of Commerce not to publish a confidential report to the President under Section 232 of the Trade Expansion Act of 1962, notwithstanding a recently enacted statute requiring publication within 30 days, because the report falls within the scope of executive privilege and its disclosure would risk impairing ongoing diplomatic efforts to address a national-security threat and would risk interfering with executive branch deliberations over what additional actions, if any, may be necessary to address the threat.”

The Center for Automotive Research estimates that the proposed 25 percent tariffs on imported autos and parts could add $6,875 to foreign vehicle prices and $4,400 per car for the overall market.

The Peterson Institute for International Economics agreed, noting the interdependence of the global automotive market.

“Often overlooked when auto tariffs are considered is that, because of border-crossing manufacturing supply chains, there are in fact no 100 percent ‘made in the USA’ cars,” said a report by the institute. “Many so-called ‘foreign cars’ are assembled in the United States—and some contain more domestic content than similar vehicles bearing American name badges.”

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