Brand-new Subaru cars sit in a lot at Auto Warehousing Company near the Port of Richmond on May 17, 2019 in Richmond, California.Justin Sullivan / Getty Images Caught in a sprawling trade dispute with U.S. rival China, President Donald Trump decided against declaring commercial war on America’s friends. The White House said Friday he is delaying for six months any decision to slap import taxes on foreign cars, a move that would hit Europe and Japan especially hard. Trump is hoping to use the threat of auto tariffs to pressure Japan and the European Union into making concessions in ongoing trade talks. “If agreements are not reached within 180 days, the president will determine whether and what further action needs to be taken,” White House press secretary Sarah Sanders said in a statement. The president has dusted off a rarely used weapon in the U.S. trade war arsenal – Section 232 of the Trade Expansion Act of 1962 – to investigate whether auto imports are a threat to U.S. national security, justifying tariffs. The Commerce Department sent its recommendations on the issue to the White House in February. In a statement, the White House said that Commerce Secretary Wilbur Ross has determined that imported vehicles and parts are a threat to national security. President Trump said he agreed, but decided to defer any action for 180 days and directed the U.S. Trade Representative Robert Lighthizer “to address the threatened impairment of national security” in negotiations. In the meantime, Ross will monitor imports and tell Trump of circumstances that “might indicate the need for further action.” The White House statement doesn’t mention tariffs, but clearly they are the prime option to reduce imports. In justifying action for national security reasons, the statement says the U.S. industrial base depends on American-owned auto companies to come up with technology to maintain U.S. military superiority. The Commerce Department found that because of rising imports of autos and parts over the past 30 years, the market share of U.S.-owned automakers has fallen. Sales revenue has dropped, causing a lag in research and development spending by U.S. automakers which is “weakening innovation and, accordingly, threatening to impair our national security,” the statement said. But the statistics used to justify the action are fuzzy and don’t match market share figures from the industry. In 2017, General Motors, Ford, Fiat Chrysler and Tesla combined had a 44.5 per cent share of U.S. auto sales, according to Autodata Corp. Those figures include vehicles produced in other countries. It’s possible that the Commerce Department didn’t include Fiat Chrysler, which is now legally headquartered in The Netherlands but has a huge research and development operation near Detroit. It had 12 per cent of U.S. auto sales in 2017. The Commerce figures also do not account for research by foreign automakers. Toyota, Hyundai-Kia, Subaru, Honda and others have significant research centres in the U.S. “The case remains clear — cars are not a national security threat,” the Alliance of Automobile Manufacturers, an industry trade group, said in a statement. “We are deeply concerned that the administration continues to consider imposing auto tariffs. By boosting car prices across the board and driving up car repair and maintenance costs, tariffs are essentially a massive tax on consumers.” Trump used the national security justification last year to impose tariffs on imported steel and aluminum. One of the motivations was to coerce Canada and Mexico into agreeing to a rewrite of North American free trade pact. In fact, the Canadians and Mexicans did go along with a revamped regional trade deal that was to Trump’s liking. But the administration has so far refused to lift the taxes on their metals to the United States
Origin: Trump delays imposing tariffs on auto imports and parts