Trump Administration Delays Decision on Car Tariffs
Date: Thursday, May 16, 2019
Source: The Wall Street Journal
Final decision put off for about six months as the president faces broad opposition from the auto industry and lawmakers, as well as legal challenges
WASHINGTON—The Trump administration has put off a final decision on whether to impose broad tariffs on automobile and auto-part imports for about six months, two administration officials said Wednesday.
President Trump was facing a deadline this week on whether to impose tariffs following a report from the Commerce Department about the national-security risks of vehicle imports.
The major parts of the U.S. auto industry are united in opposing the tariffs, and industry officials were expecting a delay rather than a move to impose the duties.
Mr. Trump has repeatedly warned he could impose tariffs on cars produced by major trading partners including the European Union and Japan, and the administration has sought to use the pressure from that threat to negotiate bilateral trade agreements.
Talks with Japan and the EU are in the early stages, however, and trade experts say the administration needs more time to seek agreements before resorting to tariffs, which could chill efforts to strike a deal.
Mr. Trump faces broad opposition from the industry and lawmakers on the tariffs, as well as legal challenges to his use of the national-security law known as Section 232 to impose them. The law allows for an additional 180 days for negotiations with trading partners after a 90-day decision window for the president that closes this week.
“The lack of certainty is worrisome,” said Bryan Goodman, a spokesman for the Alliance of Automobile Manufacturers, a trade group representing 12 of the largest American and foreign-brand car makers. “We are deeply concerned that the administration continues to consider imposing auto tariffs,” he added.
When Mr. Trump first proposed the tariffs last year, he said cars imported to the U.S., as well as foreign-sourced auto parts, could be subject to duties of up to 25%.
Auto makers and their suppliers have warned the tariffs would result in higher prices on vehicles, including those built in the U.S. that use parts sourced abroad. Imported parts typically make up 40% to 50% of domestic vehicle content, according to the car companies.
A new 25% tariff could boost the average price of a car sold in the U.S. by $4,400, according to a report from the Center for Automotive Research. The average price of an imported vehicle would rise even more, by about $6,875, the group said.
“We are grateful for the additional time and for additional consideration,” said Ann Wilson, senior vice president at the Motor and Equipment Manufacturers Association, which represents suppliers to the auto industry. She added that suppliers “fundamentally disagree” with the notion that imported components are a national-security risk.
The Trump administration is likely to formalize the delay in the coming days. It wasn’t immediately known if the coming statement would detail possible tariffs or quotas or the trading partners that could be hit by the penalties.
Last year, Mr. Trump used Section 232 to impose broad steel and aluminum tariffs on countries ranging from geopolitical rivals such as China and Russia to neighbors Canada and Mexico.
The delay in a tariff decision was reported earlier Wednesday by Bloomberg News.