Business

U.S. commerce secretary says he 'hopes' to avoid new auto tariffs, citing conversations with Japanese automakers

Bloomberg, Reuters, Staff Report

After discussions with automakers including firms in Japan, the Trump administration may not need to place tariffs later this month on automobiles imported from the European Union and elsewhere, Commerce Secretary Wilbur Ross has said.

“We’ve had very good conversations with our European friends, with our Japanese friends, with our Korean friends, and those are the major auto producing sectors,” Ross told Bloomberg Television in an interview published Sunday.

“Our hope is that the negotiations we’ve been having with individual companies about their capital investment plans will bear enough fruit that it may not be necessary to put the 232 fully into effect, may not even be necessary to put it partly in effect,” Ross said, referring to the investigation under Section 232 of a 1962 trade law.

The commerce secretary was speaking from Bangkok, where he’s attending a regional summit.

In May, the White House agreed to delay new tariffs on imported vehicles and parts for six months as Washington engaged in negotiations with the European Union and Japan.

In September the U.S. struck a deal with Japan that was said to have averted the tariffs, with Abe and Trump issued a joint statement that said the two countries would “refrain from taking measures against the spirit of these agreements” and would “make efforts for an early solution to other tariff-related issues.”

During a news conference the same day, Abe said he and Trump had verbally confirmed that those passages referred to Washington’s commitment not to apply additional tariffs on Japanese autos, but no such assurances were issued in writing.

South Korea was earlier exempted from any future tariffs because it renegotiated the U.S.-Korea Free Trade Agreement, or KORUS, last year.

The EU has yet to reach an agreement with the Trump administration, but has maintained that cars made in the 28-country bloc don’t pose a threat to U.S. national security and shouldn’t be targets of American tariffs. In September, European Trade Commissioner Cecilia Malmstrom told Bloomberg that she hoped the deadline would be extended.

Washington has already targeted the EU with duties on its steel and aluminum exports using the same national-security justification. Talks on a trade deal have stalled in part due to the EU’s refusal to include agricultural products.

U.S. President Donald Trump last month said Washington continued to talk with the EU about trade, but aimed to avoid imposing broader tariffs for now.

U.S. Treasury Secretary Steven Mnuchin has also lauded increased investment by European carmakers in the United States.

Those remarks have given EU diplomats hope for another reprieve, but they say they remain on guard.

“We’re hopeful that we can avoid the car tariffs for now, but we also know there is a chance the president could change his mind,” said one diplomat, who was not authorized to speak publicly.

Germany’s BMW, the biggest U.S. automotive exporter by value for the past five years, said last month it had warned U.S. officials that intensifying a global trade war could threaten jobs at its plant in Spartanburg, South Carolina, which exports about 70 percent of its production.

Both BMW and Daimler have invested to expand the production capacity of plants in the United States where they build mainly larger sports utility vehicles (SUVs) to keep up with rising demand and because it makes good economic sense.

In January, Volkswagen AG pledged to invest $800 million and add 1,000 jobs to build electric vehicles in Chattanooga, Tennessee.

GET THE BEST OF THE JAPAN TIMES
IN FIVE EASY PIECES WITH TAKE 5