Trade War Watch: Were the Auto Tariffs Ever Supposed to Be More Than a Threat?

Matt Posky
by Matt Posky
trade war watch were the auto tariffs ever supposed to be more than a threat

The U.S. Commerce Department has submitted draft recommendations to the White House on its investigation into whether it’s prudent to impose tariffs of up to 25 percent on imported automobiles and parts, based on the premise that they’re a threat to national security. The possibility has the industry in a tizzy, with both foreign and domestic brands lobbying against it.

Truth be told, we half assumed the entire concept was a ruse to bring other nations to the bargaining table with something to lose — a scenario where the United States could be viewed as a favorable alternative to tariff-crazy China. However, China has begun opening its market to foreign automakers while also placing a massive 40 percent duty on American autos, leaving the U.S. at a disadvantage. Now it looks as if the Trump administration may go through with everything.

According to Reuters, two administration officials claim the Section 232 recommendations on ensuring health within the domestic auto industry are undergoing an interagency review process. They’ll be discussed today during the president’s weekly meeting with top trade officials. Thus far, the White House has promised not to move forward with new tariffs on the European Union or Japan as long as it is making constructive progress in trade negotiations.

The EU’s trade commissioner, Cecilia Malmstrom, is scheduled to convene with U.S. Trade Representative Robert Lighthizer in Washington on Wednesday to discuss the negotiations. However, one of the officials claims the Trump administration wanted to send a message for negotiators to get the lead out and make some real headway.

From Reuters:

But having the Commerce report ready for action would underscore a consistent threat from President Donald Trump – that he would impose tariffs on autos and auto parts unless the EU and Japan make trade concessions including lowering the EU’s 10 percent tariff on imported vehicles and cutting non-tariff barriers.

Trump has repeatedly suggested he would move quickly to impose tariffs, even before the Commerce Department launched its investigation in May into whether imported autos and parts pose a national security risk. The study followed closely on the heels of the imposition of similar national security tariffs on steel and aluminum.

“We said if we don’t negotiate something fair, then we have tremendous retribution, which we don’t want to use, but we have tremendous powers,” Trump said on Wednesday. “We have to – including cars. Cars is the big one. And you know what we’re talking about with respect to cars and tariffs on cars.”

In October, the administration said it had planned to open formal trade talks with the European Union and Japan in early 2019 — once the 90-day required congressional notification period ends. But backlash to the proposal cropped up long before that date.

Automakers, unilaterally opposed to higher tariffs, claim there’s no reason to presume imported vehicles and parts risk national security. Of course, security is unlikely a pressing matter within the industry. Already suffering in China due to its steep tariffs, certain brands don’t want additional import trouble.

A group representing major automakers told the Commerce Department in July that imposing tariffs of 25 percent on imported cars and parts would raise cumulative prices for U.S. vehicles by $83 billion annually and risk hundreds of thousands of jobs. According to the The Alliance of Automobile Manufacturers, consumers would see an alleged premium of $6,000 on imported vehicles and roughly $2,000 on domestically assembled products. Some automakers have threatened to scrap future investment in the U.S. if the administration goes through with the fees.

[Image: Nissan]

Join the conversation
2 of 28 comments
  • Antiquepacbell Antiquepacbell on Nov 14, 2018

    Chicken tax derp, derp. America sucks and Trump sucks derp, derp. Aussie land lost its auto industry and has a crap GDP. Chicken tax good. Trump good.

  • Cimarron typeR Cimarron typeR on Nov 14, 2018

    it amuses me on this site, how a click bait articles can stir up a frenzy ,all good for the pocketbooks of TTAC but most of us reasonable folks can read between the lines and realize that this is just posturing from Washington.USMCA is a great example. If a couple of USDMs decide to import a few less window switches and light bulbs from China, all the better.

  • Cprescott Ford killed the TRANSit because it identified itself as a station wagon.
  • Crtfour I live in East Tennessee where most of the time driving is pretty low stress. But for work I have the misfortune of passing through Atlanta every 3-4 months. And passing through downtown you have to change lanes and merge so many times I still can't seem to keep it straight. On my last trip I ended up in an exit only lane ; the lane next to me where I had to get into was stopped so I was blocking the exit lane with this guy behind me blowing his horn and flashing his lights. I finally managed to get over finally allowing this guy to floor it and be on it's way. I consider myself a good driver with the exception of passing through there.
  • Pishta Those 80 B2000's were very Ford Courier like but the 81's had a completely new for Mazda dash. Less pods, more integration in one window. These didn't get the F motor until 84(?) only with the B2200 option. Single wall beds had lost of rust through issues. The 80 Quad headlamp grill was very rare, I dont rememeer seeing but one growing up.
  • FreedMike So it has transited out of existence here...
  • TheEndlessEnigma Self fulfilling prophesy. Ford spends virtually nothing on sales and marketing for the Transit....then scratches their collective heads not understand why it doesn't sell to their assumed objectives. If you do not market the vehicle, it will not sell. Pretty simple to understand really. Ford sure is working hard to make itself a niche automobile company, trucks and SUV's only. But that's OK, Kia/Hyundai/Toyota/Honda and yes even Volkswagen & Nissan are more than happy to sell to those customers Ford is apparently happy to walk away from.