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]