Automakers brace for US govt report on import tariffs
China's regulators take steps on bond defaults
A confidential Commerce Department report due to be sent to Donald Trump is widely expected to clear the way for the U.S. president to threaten tariffs on imported autos and auto parts by designating the imports a national security threat, auto industry officials said.
The report's recommendations may bring the global auto industry a step closer to its worst trade nightmare - U.S. tariffs on millions of imported cars and parts of up to 25 percent that many in the industry fear would add thousands of dollars to the cost of vehicles and potentially cost hundreds of thousands of jobs throughout the U.S. economy.
The contents of the report are expected to remain classified while Trump considers its recommendations, leaving the industry and major car exporters Japan, the European Union and South Korea in the dark about its consequences.
Auto industry officials said they expect the report to recommend at least some tariffs so that the administration can use the findings of the probe as negotiating leverage during negotiations this year with Japan and the EU.
The report is the result of an investigation started by the Commerce Department in May 2018 at Trump's request. Known as a Section 232 investigation, the probe's purpose is to determine the effects of imports on national security.
The final version will be sent to the White House to meet a statutory deadline, a Trump administration source told Reuters.
Confidential draft versions of the recommendations have circulated to the White House and other government agencies for review since last November. Automakers and parts suppliers are anticipating its recommendation options will include broad tariffs of up to 20-25 percent on assembled cars and parts, or narrower tariffs targeting components and technologies related to new energy cars, autonomous, internet-connected and shared vehicles.
"Nobody I've talked to in the industry thinks the report won't recommend tariffs" in view of the Trump administra- tion's stated trade priorities, said an automotive official who spoke on condition of anonymity. "And there's not much chance that Trump decides not to impose them."
Administration officials have said tariff threats on autos are a way to win concessions from Japan and the EU. Last year, Trump agreed not to impose tariffs as long as talks with the two trading partners were proceeding in a productive manner.
The Commerce Department alluded to a focus on emerging vehicle technologies when it opened the probe.
A report from the wellrespected Center for Automotive Research in Ann Arbor, Michigan, published showed that its worst- case scenario of a 25- percent tariff would cost 366,900 U. S. jobs in the auto and related industries. U. S. light duty vehicle prices would increase by $ 2,750 on average - including U. S.- built vehicles - reducing annual U. S. sales by 1.3 million units and forcing many consumers to the used car market, the think tank's report said.
China's central regulators have released two guidelines in the past three months to tackle corporate bond defaults that took place from last year to the beginning of this year.
The National Development and Reform Commission issued an announcement on its official website on Tuesday to urge local authorities to check companies' ability to repay their bonds. Comprehensive investigations should be conducted to avoid risks.
The announcement came one day after the suspension from trading of a corporate bond issued by China Minsheng Investment Group, which is a private equity group backed by many of China's leading privately-owned enterprises. The group had already made a technical default on Jan 29 by missing the deadline to repay principal on a 3-billionyuan ($44 million) private placement bond.
But the group's president Lyu Benxian said that such difficulties are acceptable for the four-year-old company which is still "in its infancy".