Global automakers await Trump car tariff decision

Company executives and government officials in the US and EU have said a six-month delay on import taxes is likely.

German Chancellor Angela Merkel stands next to Mercedes-Benz CEO Ola Kallenius at the Frankfurt Motor Show [File: Ralph Orlowski/Reuters]
German Chancellor Angela Merkel stands next to Mercedes-Benz CEO Ola Kallenius at the Frankfurt Motor Show [File: Ralph Orlowski/Reuters]

Automakers around the world are awaiting a decision from United States President Donald Trump on whether he will impose up to 25 percent tariffs on US car and auto part imports after a 180-day review period elapsed this week.

Trump was briefed ahead of the expiry of the self-imposed deadline, which he set in May, to decide whether to again extend a review or impose tariffs that automakers have warned could cost jobs and dramatically boost vehicle prices.

“I’ll make a decision fairly soon,” Trump said on Wednesday. “I was fully briefed.”

Officials from major automakers told the Reuters news agency they believe Trump will not impose new levies on vehicles from the European Union, Japan or elsewhere – amid a trade war with China.

The Trump administration first launched its probe of foreign autos in May 2018. Then, six months ago, Trump agreed with an administration study that some imported cars and trucks are “weakening our internal economy” and threatening to harm national security. But that report stopped short of naming specific vehicles.

Trump may make an announcement on Friday. Nothing is final until he signs off, administration officials say.

‘Cars are the big one’

Trump has been especially critical of foreign-made vehicles and jawboned both US and foreign automakers to build more cars domestically. “Cars are the big one,” he said last year.

A delay on tariffs could push the issue back to the middle of the 2020 presidential campaign and experts say it could be harder for Trump to impose a hefty tariff on a major consumer product close to an election.

Tariffs may not be necessary, Commerce Secretary Wilbur Ross said earlier this month. EU officials also expect Trump to announce a six-month delay.

On May 17, Trump had postponed a decision on tariffs by up to 180 days as he ordered US Trade Representative Robert Lighthizer to pursue negotiations.

The White House declined to comment on Thursday.

Ahead of the deadline, foreign automakers have been eager to highlight their US investments in trying to dissuade Trump from using tariffs that they argue could cost US jobs.

On Wednesday, Tennessee Governor Bill Lee, one of Trump’s Republican allies, attended a groundbreaking at Volkswagen’s Chattanooga assembly plant, marking the beginning of an $800m expansion to build electric vehicles and add 1,000 jobs.

South Korean automaker Hyundai Motor Co has also announced it will start making Santa Cruz pick-up trucks at its Alabama factory in 2021, with an investment of $410m, as it seeks a foothold in the segment led by US rivals.

Japanese automakers and suppliers have announced billions of dollars in investments, most notably a $1.6bn joint venture plant in Alabama by Toyota Motor Corp and Mazda Motor Corp.

Germany’s merchandise trade surplus with the US – $69bn in 2018 – remains a sore spot with the Trump administration. Two-thirds of Japan’s $67.6bn US trade surplus last year was from the auto sector.

Source: Reuters

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