Advisers worry as Trump continues to push for 25% auto tariffs.
Meets with EU’s Juncker at White House
WASHINGTON • Several of U.S. President Donald Trump’s senior economic advisers believe he plans to impose a 25-per-cent tariff on close to US$200 billion in foreign-made automobiles later this year, three people briefed on discussions said.
Trump wants to move forward despite numerous warnings from GOP leaders and business executives who have argued that such a move could damage the American economy and lead to political mutiny.
But Trump has become increasingly defiant in his trade strategy, following his own instincts and intuition and eschewing advice from his inner circle. He has told advisers and Republicans to simply trust his business acumen, a point he tried to reinforce Wednesday morning in a Twitter post.
“Every time I see a weak politician asking to stop Trade talks or the use of Tariffs to counter unfair Tariffs, I wonder, what can they be thinking?” Trump wrote Wednesday. “Are we just going to continue and let our farmers and country get ripped off ?”
Trump’s trade strategy, and his potential auto tariffs, hit a key juncture Wednesday, when the U.S. president met with European Commission president Jean-Claude Juncker.
Trump and European Union leaders announced Wednesday they have agreed to work toward “zero tariffs” and “zero subsidies” on non-automobile goods and would work to resolve U.S. tariffs on steel and aluminum imports that have roiled European markets.
The president, in a hastily called Rose Garden statement with Juncker, said the EU had agreed to buy “a lot of soybeans” and increase its imports of liquefied natural gas from the U.S. Juncker, meanwhile, said the U.S. and EU had agreed to hold off on further tariffs as part of trade talks aimed at averting a crippling trade dispute involving the automobile market.
Despite the upbeat mood, there is little evidence that this trade approach is working inside the White House. The disunity there and Trump’s insistence on pushing ahead on auto tariffs was described by three people briefed on the status of negotiations, who spoke on condition of anonymity because they were not authorized to reveal internal deliberations.
Trump has said imposing tariffs on foreign cars could push Americans to buy more U.S. autos, helping U.S. workers. But critics believe tariffs would drive up the cost of all cars and pass inflated prices on to consumers.
The U.S. imported a record US$192 billion in new passenger vehicles in 2017. The EU charges a 10-percent tariff on imports of U.S. autos, and the U.S. has a 2.5-per-cent tariff on European cars. The U.S. also charges a 25-per-cent tariff on light truck and sport-utility vehicle imports from other countries. Complicating matters further, a number of top European auto firms, such as BMW and Mercedes, already make many automobiles in the U.S., as do Japanese companies such as Honda, Nissan, Toyota, and Subaru.
U.S. Commerce Department officials are now considering a range of options to address Trump’s insistence that cheap foreign cars are flooding the U.S. market, and some of those measures would stop far short of imposing tariffs, two people briefed on the discussions said. But several of Trump’s advisers believe he is expected to follow the approach he took with steel and aluminum imports and choose the most severe restrictions and his favoured tool — tariffs across the board, according to the three people briefed on White House discussions.
The constant back-andforth of meetings, threats, tariffs and counter-tariffs has spooked many Republicans, splintering the GOP and many of the business groups who marched in lockstep with Trump last year in his push to lower taxes.
While Trump was meeting with Juncker, Sen. Lamar Alexander, R-Tenn., planned to introduce a bill that would make it much harder for Trump to impose tariffs on foreign automotive imports, showing more cracks in the Republican Party as they fear political consequences in the midterm elections.
Months after Trump first imposed tariffs on steel and aluminum imports, the U.S. is now in skirmishes with China, Japan, the EU, Canada, Mexico, and Turkey. Trump has also recently complained about what he views as unfair trade practices from India, suggesting he could soon turn his attention to the world’s second most-populous country.
Ottawa has promised to hit the U.S. with “proportional” retaliatory tariffs if Trump follows through on his threat to impose tariffs on automobiles and auto parts made in Canada.
Before Trump could impose tariffs on auto imports, the Commerce Department must issue a finding that they pose a national security threat to the U.S. Several Republican lawmakers have said such a finding would be laughable, but the Commerce Department has flexibility to make a determination on its own. A Commerce Department official, speaking on condition of anonymity to discuss the process so far, said the review had not been completed and no final decisions had been made.