Business

Japan, EU, Canada and industry groups oppose proposed U.S. duties on imported cars

Kyodo

Japan, the European Union and Canada on Thursday expressed opposition to U.S. President Donald Trump’s proposal of additional tariffs of up to 25 percent on imported cars and parts, insisting that such imports from the three allies pose no threat to U.S. national security.

“The importation of automobiles and auto parts from Japan has not by any means threatened to impair the national security of the United States, and will never do so in the future,” Kazutoshi Aikawa, deputy chief of mission at the Japanese Embassy in Washington, said at a U.S. Commerce Department hearing.

European Union Ambassador David O’Sullivan criticized Trump’s threat to impose auto import duties, saying, “The European Union reiterates its firm opposition to the proliferation of measures taken on supposed national security grounds for the purposes of economic protection.”

“Frankly, the notion that imports of autos and auto parts from your closest allies could threaten U.S. national security is, bluntly speaking, absurd,” O’Sullivan told the hearing as he signaled there would be countermeasures against Washington’s possible restrictive trade measures.

Referring to Ottawa’s tariffs in retaliation for the U.S. imposition of stiff global duties on steel and aluminum imports, Kirsten Hillman, Canada’s deputy ambassador, warned that if auto tariffs are levied, “Canada will once again be forced to respond in a proportional manner.”

Aikawa argued that the growth of the U.S. automotive manufacturing base owes much to the globalization of the industry and its value chain. He also highlighted contributions by Japanese auto and auto-related companies in creating more than 1.5 million U.S. jobs and spurring the growth of the U.S. manufacturing base through investment totaling $48 billion.

“Japan is a proud, indispensable ally of the United States, and the trade relations with Japan contribute not only to the economic prosperity of the United States, but also to its national security,” he said.

He said new auto tariffs, if invoked, would significantly affect U.S. consumers and carmakers alike, citing data that the imposition of 25 percent tariffs would increase the price of an imported $30,000 car by $6,400.

Current U.S. tariff rates are 2.5 percent on cars and 25 percent on trucks.

“With the inevitable increase of domestic production costs, U.S. automakers would eventually lose their competitiveness,” Aikawa said.

O’Sullivan blasted the U.S. investigation into the impact of automobile and auto parts imports on national security, saying it “lacks legitimacy and any factual basis and would lead the United States into a breach of international law.”

On May 23, the Commerce Department launched a Section 232 investigation regarding imported automobiles and parts, a move that could result in the imposition of new duties on major car exporters such as Japan and Germany.

Despite opposition at home and abroad, there is speculation that Trump — whose “America First” trade policy has fueled concerns about a global trade war — may announce tariffs resulting from the probe before his country’s November midterm elections.

In Thursday’s hearing, Commerce Secretary Wilbur Ross said it is “too early” to say if the Trump administration would decide to impose the new levies, even though many carmakers suspect it is a foregone conclusion.

U.S. automobile industry groups were similarly against the administration’s possible restriction on imported cars and parts, saying higher tariffs would harm American consumers and workers, and the economy in general.

“The opposition to this investigation is widespread and deep because the damaging consequences are alarming,” said Jennifer Thomas, vice president of federal government affairs at the Alliance of Automobile Manufacturers, a trade association representing 12 U.S. and foreign automakers, including General Motors Co. and Toyota Motor Corp.

“Simply put, auto tariffs are a massive tax on consumers,” Thomas said, citing industry analysis that a 25 percent tariff would raise the price of an imported car by nearly $6,000 and the price of a U.S.-built car by $2,000, on average.

She also expressed concern about possible trade retaliation, saying retaliatory levies would shrink U.S. auto exports, threaten American jobs and reduce the competitiveness of the U.S. auto industry.

The American Automotive Policy Council, which represents GM, Ford Motor Co. and Fiat Chrysler Automobiles, said there is “no evidence” that automobile imports pose a threat to U.S. national security.

Matt Blunt, president of the council, warned that the envisaged levy would diminish the contributions to the U.S. economy made by the three automakers with their iconic brands and deep American roots.

“Our analysis shows that a tariff increase under Section 232, coupled with the existing tariffs on imported steel and aluminum, including from our North American allies, will result in a net loss of American jobs, lower capital investment, lower exports by the U.S. auto sector,” Blunt said.