Trump is reportedly considering a plan to slap tariffs on imported cars

Ivan Schwartz
May 24, 2018

The Trump administration is considering new tariffs on imported cars in a move that trade analysts said was created to put pressure on Mexico during the final stages of negotiations for a new North American trade deal.

The president signaled earlier Wednesday on Twitter that an important announcement was imminent to help the USA car-manufacturing industry.

Trump hinted at the auto action early Wednesday when he tweeted, "There will be big news coming soon for our great American Autoworkers". During a meeting with auto executives earlier this month, Trump said he would push for an increase in the production of vehicles built at USA plants. The United States imported $192 billion in passenger vehicles past year, with Mexico being the leading source, followed by Canada, Japan and Germany.

The Trump administration took the better part of a year to complete the investigation into steel and aluminum.

Commerce Secretary Wilbur Ross announced he initiated a so-called Section 232 investigation on auto trade - which would provide the legal basis to impose tariffs, if his department finds imports threaten United States national security - after speaking with Donald Trump on the matter.

Section 232 allows the president to impose trade restrictionson national security grounds.

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The report caused USA automaker shares to jump and hit those of overseas companies like Toyota Motor Corp., with its New York-traded shares falling 0.67 percent. The administration is now considering tariffs of up to 25%, according to those briefed on the plan.

Critics fear that other countries will retaliate or use national security as a pretext to impose trade sanctions of their own.

But the source said it is meant only as a pressure tactic to push Canada and Mexico for a better deal on NAFTA, and to press other countries that are now negotiating exemptions from USA steel and aluminum tariffs.

He noted that both Mexico and Canada have been "very hard to deal with" during the negotiations. I am not happy with their request. "But I will tell you in the end we win, we will win and we'll win big", he said. His trade chief, Robert Lighthizer, has demanded more stringent rules on auto content to ensure that more components in North American-made cars - particularly steel, aluminum and glass - are sourced from within the NAFTA zone.

Asked if the measures would hit Mexico and Canada, a Mexican source close to the NAFTA talks said: "That probably is going to be the next battle".

Other reports by GizPress

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