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Trump delays decision on auto tariffs for up to six months
WASHINGTON, May 19, 2019 (BSS/AFP) – President Donald Trump on Friday
announced a six-month delay in imposing steep tariffs on auto imports,
seeking to pressure Europe and Japan into bargaining table concessions on
trade.
The decision marked a temporary reprieve from what would have been a
sizable escalation in Trump’s multi-front trade wars.
Trump’s threat targets a major chunk of global economic activity with
profound disruptions. Hundreds of billions of dollars in autos are
manufactured, shipped and sold internationally every year.
In a proclamation, the president directed US Trade Representative Robert
Lighthizer to update him within 180 days on the outcome of negotiations with
the EU, Japan and “any other country” Lighthizer deems appropriate.
By leaving the threat of tariffs hanging, Trump’s move raises the
temperature in European capitals already angered by the imposition of
punishing US duties on steel and aluminum last year.
Trump’s decision also preserved a truce declared last year with European
Commission President Jean-Claude Juncker in which both sides agreed to cease
trade hostilities while efforts continued to resolve the trade dispute.
Despite the decision, Trump continued his attacks on EU trade policy.
“The European Union treats us, I’d say, worse than China — they’re just
smaller,” Trump said at an event.
“They don’t want our farmers, they don’t want our cars… They send
Mercedes-Benz here like they’re cookies,” Trump said, adding that “they take
advantage of us on trade.”
“We all love Europe but it’s not fair.”
In response to the US metal tariffs, the EU last year imposed stinging
duties on American exports like motorcycles, orange juice, whiskey and blue
jeans, and threatened to retaliate further should the auto tariffs be
imposed.
European Trade Commissioner Cecilia Malmstrom confirmed an existing offer
that “the EU is prepared to negotiate a limited trade agreement including
cars.”
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The six-month delay had been expected this week as industry sources
confirmed media reports that Trump would hold off — delighting markets which
had feared sharp economic consequences of such a move.
– ‘Competition must be improved’ –
In his proclamation, Trump described the US auto sector as facing decline
due to unfair foreign competition.
A report by Commerce Secretary Wilbur Ross concluded that America’s
shrinking share of the auto market jeopardized its research, development and
manufacturing — all “vital to national security,” according to Trump.
In a conclusion likely to invite challenges from manufacturers and
industry analysts, Trump said America’s defense industrial base relied on the
domestic auto sector for technological advances essential to US “military
superiority.”
Citing Ross’s conclusions, Trump pointed to a doubling of US imports over
the last 34 years but accused Europe and Japan of raising “significant
barriers” to accepting American exports in return.
In that same period, the domestic market share of American-owned
manufacturers fell to just 22 percent from 67 percent, he said.
“In light of all of these factors, domestic conditions of competition must
be improved by reducing imports,” Trump said.
Reacting to the announcement, Dieter Kempf, head of the German industrial
federation, said “cars do not threaten the national security of the United
States.”
Japanese automaker Toyota, which has factories and research centers in the
United States also strongly rejected the notion.
“Today’s proclamation sends a message to Toyota that our investments are
not welcomed, and the contributions from each of our employees across America
are not valued,” a statement read.
“If import quotas are imposed, the biggest losers will be consumers who
will pay more and have fewer vehicle choices.”
Charlie Chesbrough, senior economist at Cox Automotive, said that by
jacking up tariffs on $200 billion worth of Chinese merchandise last week
Trump had shown Brussels his tariff threats were not idle.
“I think it’s a signal to everybody that he means business,” Chesbrough
told AFP.
“I think in general it’s a good news story in that it buys the industry a
little more time to try to get the president to change his mind about the
tariffs.”
The United States imported almost $200 billion worth of autos in 2017,
according to the proclamation.
But, while foreign-branded cars are popular in the United States, many
automakers have championed their US-based manufacturing operations in places
like Alabama, Kentucky and South Carolina.
BSS/AFP/HR/0940