By on November 13, 2018

infiniti nissan factory japan

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]

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28 Comments on “Trade War Watch: Were the Auto Tariffs Ever Supposed to Be More Than a Threat?...”

  • avatar

    I should hope that auto tariffs were more than a threat! Maybe we’ll see a more fair and equitable trade arrangements on cars in the future.

    My hope is that this Trump fellow can correct much of what is wrong with trade agreements and bring those jobs back to the good old US of A.

    USMCA is a great way to start, for all parties involved.

    • 0 avatar

      That only worked up until the 60s, when companies had to pay a living wage while also paying far, far more taxes. It worked just fine, but those days are gone. Businessmen (both successful ones and abject failures like Trump) have fought their entire lives to pay their employees less and outsource labor, blaming lazy greedy union workers (i.e. everyone who ever worked in a factory) for making it happen. Spending billions to elect candidates who consistently support that “cost-cutting”. While those candidates themselves became billionaires who further convinced the working class to vote against their colleagues and neighbors, all to make themselves richer in the name of American pride. Nice job doing your own part in continuing that psychotic cycle. What a patriot you are.

    • 0 avatar
      Big Al from Oz

      Yup, you simple rednecks are clueless about how economies go, maybe a bit of schooling would of given you a better life, instead of living on your keyboard, most likely paid for by welfare.

      • 0 avatar
        Art Vandelay

        Bet this simple redneck makes more than you.

        • 0 avatar
          Big Al from Oz

          Art, he appears to be full of beans.

          • 0 avatar

            Based on the fundamental changes President Trump has already made across the board in his first two years, people like qua cannot grasp the enormity of change that has already occurred and is still to come..

            For the next two years the GOP holds the Senate, which means stacking the courts with extreme right wing judges for a change as is evident by the two Justices already appointed by President Trump. And when RBG goes, there is another extreme right wing judge that will be elevated to Justice on the Supreme Court.

            For conservatives things look pretty damn good for the next two years. All this and President Trump holds the VETO power. If the libbies want to get anything done over the next two years, they have to work with the GOP Senate AND President Trump.

            I hope he makes good on his threats to tariff the hell out of unfair trading partners. Nothing focuses the mind like a crashing economy. Even better when it is someone else’s economy.

          • 0 avatar
            Art Vandelay

            Just a guess…you are an Engineer. Nice. Engineers work for me.

          • 0 avatar

            Art, I’m an MBA (Mgt&Financial Institutions w/minor in CS&VLS Networking). I also passed the CPA exam in 1982, year of my MBA. My connection to the new-car bid’ness is on account of being a paid advisor to my four brothers in the new-car bid’ness in four States.

            After retiring from the US Air Force in 1985, I was self-employed for more than 30 years rebuilding/refurbing houses owned by my wife’s family business.

            Ya ne’er can tell where life is gonna take ya.

  • avatar

    The only thing I find amusing about this, is that for years, many Toyotaphiles have proclaimed the Camry as the most American car and bla, bla, bla. Yet, Toyota said its price would be adversely affected by the tariffs. If it’s as American as apple pie, why would it be affected at all? Is the Taurus affected? Is the Tahoe? What about the Wrangler? Its almost as though its bullshit either way you look at it, from their claims or by Toyota’s claims.

    • 0 avatar

      Because it’s 2018 and people who paid even the slightest amount of attentjon in their high school level macro-economics class understand that the price of product in our modern and global economy depends on the prices of many products in a long and complicated logistics pipeline.

      Raise the cost of steel and the cost of the car made from that steel goes up. Even if the steel was 100% domestic, the mere fact that foreign steel is more expensive is an incentive for domestic steel to also increase in price.

      Or hell, maybe all the raw materials were locally sourced. But the company was depending on profit margins from other vehicles in their catalogue to keep the company profitable. Like how the Cayenne keeps porsche in the black. Lose the margins on those other products (like the Yaris) and you now need to raise prices on the Camry to make up for the shortfall in revenue.

      It’s not really that complicated. Any fool should be able to grasp that you can’t raise the cost of things without someone paying for it. Ain’t no such thing as a free lunch.

  • avatar

    To be unveiled at the Detroit Auto Show: 2021 Honda UnClarity, a stunning, high-tech concept powered by clean coal. Made in Ohio.

  • avatar

    From what I’ve read of NAFTA2 or what ever it’s called, it’s basically just an update of NAFTA1 with some technical bits thrown in from TPP that we rejected out of hand. Did we need to threaten everyone with tariffs? Or could all this been accomplished in a friendly negotiation? I would of preferred the later, but Trump doesn’t.

    • 0 avatar
      Big Al from Oz

      I agree.

      Trumps ways pi$$ people off and is counter productive. The simple ones that Trump appeals to don’t care about the US. They only care about themselves and are generally fearful of anything that changes life.

      The average Donnie Twump supporter appear to lack any form of conception. They are artless, like Trump.

      • 0 avatar

        Incredible insight from 12,000 miles away Al. And by the way Freddie, having had some insight into USMCA (US Mexico Canada Agreement) the US (and Yes, Trump) has called BS on some really one-sided arrangements. Negotiations were completely friendly, especially with Mexico. Canada tried to pull some shenanigans and make some backdoor deals with the Mexicans but we all know Canadians are perfect and would never do that.

        • 0 avatar
          Big Al from Oz

          Yes I do believe there is issues that need resolving in the US and or that matter Australia, even the World. I also believe the US is not able to achieve this on its own, it needs many allies.

          Most who voted for Trump want change, and those who believe in Trump fail to see the damage he has inflicted on the US.

          The change and direction Trump has placed the US can only cause long term damage, politically and economically.

          Those who believe that the US should look inwards fail to see the rewards the US has gained by being open in the past. The World is becoming more competitive every day and short changing your competition will make for disagreement and friction.

          It will interesting to see in a couple of years who the alternate right blame after the failure of Trump and his cohorts.

          There is a difference between being right wing or ultra conservative. I’m a right wing capitalist, not a nationalist who is prepared to reduce a country (and all its people) because I fear survival.

  • avatar

    Don’t you guys get it by now? Trump is not for the auto industry as a whole, he is for the manufacturing jobs in the industry (maybe the Mid West and the South).

    If economy collapses but he gets more jobs (a net lost) he doesn’t care, because his voter base wins.

    • 0 avatar

      Bill Clinton is still looked at favorably by many, many American voters after shipping out millions of jobs via NAFTA and WTO admission of China while making anti-immigration speeches(look it up on youtube). I’m sure Trump will sleep fine.

    • 0 avatar

      If the economy collapses you better believe all those awful contractor factory jobs will be the first to go…. and with this administration I don’t see much in the way of bailouts. It will be “bigly bad”.

      • 0 avatar
        Big Al from Oz

        I do believe it’s unfortunate that most of the Trumpettes would rather see the great nation of the US of the A lose out and become a low paid country to maintain antiquated industry rather than look at the future.

        I think the current US situation is indicative of the selfishness that has taken hold in the US.

        JFK had a great adage “Do for you country what your country can’t do for you”. Maybe these Trumpettes ought to sit down and have a look at the short term gain they think they may be getting will cost the US dearly in the longer term both with friends and Allies and economically. But, heck who cares about tomorrow that will be someone else’s problem and we can blame them.

    • 0 avatar

      If he’s for manufacturing jobs in the industry, why did he unilaterally impose steel tariffs that made steel used on automobile production substantially more expensive?

      And if this is about jobs, why is he claiming it’s about national security?

  • avatar

    Having just driven 4000 km through Europe and having seen 1 Escalade + 2 RAM towtrucks (that’s all the US stuff I saw), I’d like to ask what US vehicles Americans think will sell here if/when EU lowers its 10% car tax? GM doesn’t have dealer network anymore, Ford sells euro-Fords and Fiatsler sells vans mainly. If that 10% duty falls will Europeans buy thirsty and big US cars, honestly as an european I just can’t see it.
    Also it’s not sure what would happen to 25% chicken tax in the US…..

    • 0 avatar
      Big Al from Oz

      Trump on one hand whine about EU vehicle tax and have the chicken tax on the other.

      The other problem the US has is the out of sync with the rest of the World vehicle design regs.

      Now the US has higher manufacturing costs due to the metal taxes, which in turn forced other countries to apply and up taxes on US goods …. then the US policies have increased the value of the USD, again further reducing US competitiveness.

      Within a couple of years after trashing the US economy with a greater debt burden, reduced industrial activity, the MAGA Crowd will still blame all but themselves.

    • 0 avatar

      @Manic – Euro tariffs make it tough for US cars and trucks, including US specific Toyotas, Nissans, Hondas, etc. But European tariffs, as big as they are, they’re small potatoes compared to Euro non tariffs barriers, including very expensive gas/diesel, taxing by engine size, etc.

      The biggest/top sellers in the US would otherwise have a fighting chance, at least for survival in Europe, even if they wouldn’t exactly set the place on fire.

      Do not kid yourself thinking European buyer’s tastes are vastly different than US buyers, all things being equal. Same with the belief anything bigger than a Golf is brutally tough to park or drive, everywhere in Europe. If it’s “tough”, it’s just as bad in major US cities, beach communities, etc.

      The Chicken tax will remain as long as the, seldom talked about here, European Chicken tax remains. One counters the other, and this while Europe has no real pickups to call victims.

      • 0 avatar

        I cannot believe that people really think that the Ford F-150 would be a top seller in Europe.

        Look, Europe is not a dictatorship. They have the laws they do because that’s what their voters want. Ergo, the reason they tax based on engine size and disadvantage large vehicles as “luxury” vehicles is because that’s what the voters want. The same voters who are also the car buying public.

        Those same voters aren’t going to suddenly fall in love with buying massive BoF pickups. It would be just as ridiculous as trying to make everyone in America suddenly want to drive a Fiat 500.

  • avatar

    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.

  • avatar
    cimarron typeR

    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.

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