Trade Cases

Trump Postpones Automotive Tariffs for Six Months

May 14, 2019

Opponents of the proposed Section 232 tariffs on imports of autos and auto parts have won at least a temporary reprieve. On Friday, President Trump announced that he will wait six months before reconsidering the tariffs to give the U.S. Trade Representative time to negotiate new agreements on automotive trade with Europe and Japan.

In a report delivered to the president on Feb. 17, the Department of Commerce concluded that imports of automobiles and certain auto parts represent a threat to the domestic auto industry and thus threaten to impair U.S. national security. Commerce reached the same conclusion regarding imports of steel and aluminum. The president had a statutory deadline of May 18 to respond to the Commerce Department’s automotive report.

“United States defense and military superiority depend on the competitiveness of our automobile industry and the research and development that industry generates,” read a statement from the White House on Friday. “The negotiation process will be led by USTR Robert Lighthizer and, if agreements are not reached within 180 days, the president will determine whether and what further action needs to be taken.”

Section 232 tariffs on automotive imports have faced widespread opposition, even from the domestic auto industry, which fears they will disrupt the industry’s complex global supply chains. The Center for Automotive Research has calculated that raising tariffs on vehicle imports would increase new car prices by thousands of dollars and reduce new car sales by more than a million units per year.

“The case remains clear – cars are not a national security threat,” said the Alliance of Automobile Manufacturers in a statement on Wednesday, just prior to the president’s announcement. “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. The higher prices would lower consumer demand and could lead to the loss of as many as 700,000 American jobs….

“Since 2017, domestic and international automakers are investing $22.8 billion in new and existing facilities in the United States—largely spurred by this administration’s pro-growth policies,” the Alliance continued. “However, increased auto tariffs threaten to undo this economic progress. At the end of the day, you can have tariffs or investment, but you can’t have both.”

The White House has not commented on the size of the automotive tariffs it may impose later this year, but the Section 232 tariffs on steel amounted to 25 percent and aluminum 10 percent.