Trade War Watch: Trump Reportedly Delaying Auto Tariffs, Clock Still Ticking

Matt Posky
by Matt Posky
trade war watch trump reportedly delaying auto tariffs clock still ticking

The Trump administration was supposed to make an announcement Tuesday as to whether or not imported automobiles pose a national security risk, following discussions with trade representatives. While it wasn’t presumed that the White House would say anything truly definitive or hold a formal press conference on the issue, it was assumed that the president would take a stronger public stance either for or against an earlier proposal to raise foreign auto import tariffs to 25 percent. And it has, in a way.

According to those familiar with the matter, the White House decided to postpone any major decisions after discussing a draft Commerce Department report on the impact of auto imports with trade reps. However, the administration doesn’t have forever to make up its mind. Nor does its trading partners, which could be the point.

The investigation, which began in May under section 232 of the Trade Expansion Act, covers all imported passenger vehicles as well as auto parts. Commerce Secretary Wilbur Ross has until February to deliver his completed report to the president, who will then have an additional 90 days to make a final decision and another 15 to begin moving forward.

Unfortunately, the report remains closely guarded, so the Commerce Department’s current recommendations are a complete mystery. Most analysts believe it will recommend against unilateral tariffs but for some level of protectionism against specific countries posing an economic threat — specifically China, which imposes exceptionally high auto tariffs against the U.S. already.

At the very least, we know the administration is taking the matter seriously. According to Bloomberg, officials present for Tuesday’s meeting at the White House included Ross, Treasury Secretary Steven Mnuchin, U.S. Trade Representative Robert Lighthizer, National Economic Council Director Larry Kudlow, and Senior Adviser Jared Kushner. The discussion was said to take up the majority of the day. Lighthizer was also scheduled to meet with the EU’s trade commissioner, Cecilia Malmstrom, on Wednesday.

Malmstrom said Europe expects it will not be subject to any new U.S. auto tariffs, at least not until it has had time to talk things over with the United States. “We are under the assumption that is still valid,” she said, referencing a summer agreement not to hit each other with anymore impromptu import duties — an event capped off by a kiss between the president and European Commission chief Jean-Claude Juncker (pictured).

Trump wants a formal trade agreement with Europe and revised deals made with other major trading partners in the hopes of setting America up for a better future. We’ve long suspected that the tariff threat may simply be a bargaining chip to bring nations to the table, ready to make concessions. Perhaps the postponement is part of that. However, it still only gives the United States’ trading partners until May of next year to construct a formal trade agreement that encompasses more than just automobiles.

The White House still appears ready to move forward with the tariff plan and isn’t beholden to the Commerce Department’s recommendations — even though it’ll likely help decide any future trade rules. Meanwhile, most automakers continue to express serious concerns that a 25 import fee could upend the industry and drive up the price of every vehicle in production by a sizable margin.

[Image: White House]

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  • Spike_in_Brisbane Spike_in_Brisbane on Nov 15, 2018

    I'd like to see the Bolt in Oz but selling American cars overseas requires more than just good cars. For a start, until recently the big 3 owned subsidiaries all over the world to make cars for their local folk so export was not required. (see Holden, Opel, Daewoo, Jaguar, Saab, chunks of Mazda etc). Recent selloffs may have changed the game. Secondly, the U.S. manufacturers, unlike their European or Asian competitors make very few cars that can be assembled both LHD and RHD. Before you dismiss us as 'driving on the wrong side' they are ignoring about 1/3 of the world including countries like Australia and South Africa which have similar requirements of a car as the U.S.

  • Big Al from Oz Big Al from Oz on Nov 16, 2018

    Yup, Trump has already had a negative effect on US vehicle exporters. So much for Trump's great business and negotiating skills. Read below; "Consider the case of German carmaker BMW AG. Its plant in Spartanburg, S.C., which makes X3 and X5 SUVs, is one of its biggest in the world and has been a major source of U.S. auto exports to China. Yet, starting this year, the carmaker also began building the X3 in China to avoid the 40 percent duties Beijing now charges on American-made autos. In July it detailed plans for an expanded joint venture with Brilliance China Automotive Holdings Ltd. that will make the country an export hub for the electric version of the X3 when it enters production in 2020." Yeah, MAGA! https://www.bloomberg.com/news/features/2018-11-15/the-u-s-is-playing-catch-up-with-rivals-as-globalization-marches-on?srnd=premium-asia

  • Tassos While Acura was the first Japanese attempt to sell 'luxury' (or "premium") vehicles in the US market, and despite its original good success in the near-luxury segment with the Legend and the far smaller and less expensive Itegra (a glorified Civic), it later lost its momentum and offered a series of underwhelming vehicles. It sure is not a LUXURY maker, and as long as it offers FWD or AWD and NOT RWD vehicles, it will never be taken seriously as a serious sports cars maker. Infiniti is much worse, and if both of them go under, few will notice. Lexus was more successful, offering pimped up TOyotas for 10,000s more, but there is NO vehicle in their lineup, esp now that they scewed up the only serious entry (the LS), that I would care to consider. AND I say all this as a very satisfied owner of 5-speed Honda coupes and hatchbacks (a 1991 Civic hatch and a 1990 Accord Coupe).
  • Mike Beranek Yet another reason to accelerate the transition to electric vehicles charged with energy from wind & solar with modern, non-Monty Burns nuclear as a backup.
  • Tassos The cap the timid Western Europeans agreed to, a HIGH $60, which still lets Putin make a TON of billions of $, was way too HIGH. Ukraine correctly complained about this, it had asked for a $20 cap, I believe.
  • FreedMike "...I wouldn’t recommend holding your breath until fuel prices drop."Regular is $2.87 at my local gas station today. Considering that it was over four bucks this summer, I'd call that a drop. And it happened with the war still going on, the GOP not taking over Congress, Dark Brandon in the White House, and the Theoretical Keystone Pipeline still being canned. Imagine that. And I wonder if poor Slavuta has broken out the "will rap for food" sign yet.
  • THX1136 I would imagine the caps will have minimal impact. Putin is going to do what he wants to do regardless of how the citizens of his country fare.
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