President Donald Trump wants to put a 25 percent tariff on imports of automobiles under a similar authority that allowed him to slap duties on imports of steel and aluminum in order to protect U.S. national security, a senior administration official confirmed.
At Trump’s request, the Commerce Department on Wednesday launched an investigation into the national threat of imported automobiles, trucks and auto parts, the first step toward imposing the tariffs, Commerce Secretary Wilbur Ross said in a statement.
“There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry,” Ross said.
Trump is threatening to impose the penalties at the same time that U.S. negotiators are trying to get Canada and Mexico to agree to demands that would overhaul NAFTA’s auto rules.
Trump also issued a statement Wednesday, saying he’d urged Ross to launch the probe.
“Core industries such as automobiles and automotive parts are critical to our strength as a nation,” the president said.
The Commerce Department investigation could take several months to complete and would likely end with Commerce making recommendations on whether and how to restrict car imports, which Trump could then choose whether or not to accept.
Mexico and Canada are two of the three largest exporters of autos to the U.S. Trump has also repeatedly complained about auto imports from Germany and Japan, and has raised the issue in talks with world leaders.
Manufacturers of foreign brand autos like Toyota, Nissan and Aston Martin expressed alarm after The Wall Street Journal first reported Wednesday afternoon that the Trump administration is considering a hefty tax on imported cars to protect U.S. national security. The news outlet, quoting industry officials briefed on the broad outline of the plan, said the Trump administration is considering an inquiry to justify up to a 25 percent tariff on auto imports, which totaled $176 billion in 2017. That‘s exponentially larger than the imports of about $30 billion for steel and $18 billion for aluminum.
“If these reports are true, it’s a bad day for American consumers,” John Bozzella, CEO of Global Automakers, said in a statement. “The U.S. auto industry is thriving and growing. Thirteen, soon to be 14 companies, produced nearly 12 million cars and trucks in America last year. To our knowledge, no one is asking for this protection. This path leads inevitably to fewer choices and higher prices for cars and trucks in America.”
On Wednesday morning, Trump indicated some action is coming on autos, although it was unclear whether he was referring to ongoing talks with China, NAFTA negotiations with Canada and Mexico or something else.
“There will be big news coming soon for our great American Autoworkers. After many decades of losing your jobs to other countries, you have waited long enough!” Trump wrote on Twitter.
Trump appeared to link a potential action on autos with NAFTA talks when he told reporters later on Wednesday that he felt the auto industry would “be very happy with what’s going to happen.”
“You’ll be seeing very soon what I’m talking about,” he said before his trip to Long Island. “NAFTA is very difficult. Mexico has been very difficult to deal with. Canada has been very difficult to deal with. They have been taking advantage of the United States for a long time. I am not happy with their requests. But I will tell you, in the end, we win. We will win, and we’ll win big.”
Trump has already imposed tariffs on steel and aluminum after a Commerce Department investigation determined that current imports of both metals were large enough to threaten the long-term viability of both domestic industries, thereby putting U.S. national security at risk. Any new inquiry would also rely on the so-called Section 232 of the Trade Expansion Act of 1962, a, gives the executive branch the ability to conduct investigations to “determine the effects on the national security of imports.”
Last year, the U.S. imported $43 billion worth of cars from Canada, $39 billion from Japan, $30 billion from Mexico, $21 billion from Germany, $16 billion from South Korea and additional amounts from other suppliers.
The White House, Commerce Department and Office of the U.S. Trade Representative did not respond to requests for comment.