Business / Economy

Trump delays U.S. auto tariffs for six months, calls imports security threat

Kyodo

U.S. President Donald Trump on Friday delayed tariffs on cars and auto parts imports for up to six months and directed U.S. Trade Representative Robert Lighthizer to negotiate deals with Japan and the European Union to address what his administration perceives as a national security threat.

If agreements are not reached within 180 days, Trump “will determine whether and what further action needs to be taken,” the White House said.

The administration appears poised to use the threat of auto tariffs to pressure Japan and European countries into making concessions — possibly by seeking export restraints or quotas, a move that would be in violation of World Trade Organization rules — in respective trade negotiations.

Trump made the announcement ahead of a planned meeting with Prime Minister Shinzo Abe on May 27 in Tokyo at which bilateral trade is likely to be a major focus.

In a proclamation setting a six-month window for talks, Trump said he directed Lighthizer to negotiate deals “to address the threatened impairment of the national security with respect to imported automobiles and certain automobile parts from the European Union, Japan and any other country the Trade Representative deems appropriate.”

Lighthizer will “update me on the progress of such negotiations within 180 days,” the president said.

It is not clear, however, what the “further action” mentioned by the White House would entail.

Trump and Abe have come to an understanding that the United States will refrain from imposing tariffs on automobile imports from Japan while negotiations are underway.

The two governments launched negotiations for a bilateral trade agreement last month.

Earlier Friday, economic revitalization minister Toshimitsu Motegi said in Tokyo that Lighthizer had confirmed the United States will not push Japan to restrain its automobile exports as part of a bilateral trade deal.

Citing a draft executive order, Bloomberg News reported Wednesday that Trump will give Japan and the European Union 180 days to “limit or restrict” exports of automobiles and auto parts to the United States in return for delaying auto tariffs.

Trump has threatened to impose additional tariffs of up to 25 percent on imported cars and parts. If he follows through, the new duties would significantly impact major car exporters such as Japan and Germany.

Automobiles and auto parts accounted for about 75 percent of the U.S. trade deficit as of 2017.

On Friday, Trump said a Commerce Department investigation has concluded that “automobiles and certain automobile parts are being imported into the United States in such quantities and under such circumstances as to threaten to impair the national security of the United States.”

The department also found these imports are “weakening our internal economy,” and decried “protected foreign markets, like those in the European Union and Japan.”

The department said “automotive research and development is “critical to national security,” and that “the U.S. defense industrial base depends on the American-owned automotive sector for the development of technologies that are essential to maintaining our military superiority.”

American automakers and dealers, as well as U.S. business organizations, disputed Trump’s claim that imports of car and auto parts pose a threat to U.S. national security.

“Cars are not a national security threat,” said the Alliance of Automobile Manufacturers, a trade association representing 12 U.S. and foreign automakers, including General Motors Co. and Toyota Motor Corp.

“We are deeply concerned that the administration continues to consider imposing auto tariffs,” the group said in a statement.

The U.S. Chamber of Commerce said Trump’s claim “is a misuse of the administration’s trade authorities,” and that “the continued threat of tariffs on cars and auto parts only creates more uncertainty weakening our economy.”

The American International Automobile Dealers Association said that if Trump slaps 25 percent tariffs on imported cars and auto parts, he will be responsible for “a drastic tax increase on American consumers.”

Such action could result in a loss of 2 million vehicle sales and jeopardize up to 700,000 American jobs, it said.