United States President Donald Trump recently threatened to impose a 25% tariff on automobiles and auto parts from Europe, Japan, and Korea under Section 232 of the 1962 Trade Expansion Act citing national security matters. This section has also used to impose steel and aluminum tariffs from Canada, Mexico, and abroad.
At public hearings in July, companies and governments from Europe to Asia warned that duties on car imports would hurt the U.S. economy, disrupt the global automotive industry, and widen the rift between America and its closest allies, according to driving.ca.
During a press conference last week, Trump’s frustrations with Japan in regards to what he sees as unfair trade practices came out when he told a Japanese reporter to “Say hello to Shinzo (Abe, Japan’s prime minister). I’m sure he’s happy about tariffs on his cars.”
He added that Japan sends in “millions of cars at a very low tax,” but Japanese imports of American cars are subjected to “a massive tax.”
According to driving.ca, South Korea could also be on the tariff block even though it struck a revised trade deal with the White House this summer.
The European Union Commission President Jean-Claude Juncker hinted earlier in the week that American tariffs on European cars and car parts might begin in the New Year.
“If implemented, increased auto tariffs would not only undermine the potential success of the USMCA, they would also pose a material threat to the economy and may result in the loss of as many as 700,000 jobs across the U.S.,” said Jennifer Thomas, vice president of government affairs for the Alliance of Automobile Manufacturers, to Reuters.
Tariffs on steel and aluminum have already cost the industry billions of dollars as well as turmoil in trade which has stalled investment, according to the Motor and Equipment Manufacturers Association (MEMA).
“In the last year our members have faced Section 232 steel and aluminum tariffs, other Section 232 tariffs proposed, and Section 301 tariffs on goods from China,” said Ann Wilson, senior vice president of government affairs at MEMA, who spoke to Reuters.
Trump will make his decision after reading a draft report by the U.S. commerce department on whether or not to impose the tariffs on automobiles, including SUVs, vans and light trucks, and auto parts. The department has until February to report its findings to the president.
Canada and Mexico will be exempt from automobile and auto parts tariffs under the United States-Mexico-Canada Agreement.