US launches national security probe of vehicle imports

by Abel Hampton May 26, 2018, 0:11
US launches national security probe of vehicle imports

China is a relatively minor player in the USA auto import market, ranked 10th in dollar terms, but its massive vehicle industry is eager to expand overseas.

The Trump administration on Wednesday launched an investigation into whether tariffs are needed on the imports of automobiles into the United States, moving swiftly as talks over the North American Free Trade Agreement have stalled.

The process for investigating whether tariffs are necessary and then imposing typically takes about six months.

In a separate statement, President Donald Trump said: "Core industries such as automobiles and automotive parts are critical to our strength as a Nation".

And it highlighted German firms' "significant contribution to the American balance of trade in cars" with their exports to third countries. He has also criticized European Union auto imports and tariffs and earlier this year threatened a "tax" on European imports.

If investigators can prove that foreign auto makers are harming the prospects of United States vehicle makers, it could provide the legal basis to impose tariffs on auto imports. 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.

How many are tied to the auto industry?

Roughly 12 million cars and trucks were produced in the United States previous year, while the country imported 8.3 million vehicles worth $192 billion.

German vehicle behemoth Volkswagen condemned Washington's "one-sided protectionism", saying "only free and fair trade secures increased prosperity". "This path leads inevitably to fewer choices and higher prices for cars and trucks in America", he said in a statement.

The president appears to have previewed the internal debate with an early-morning tweet: "There will be big news coming soon for our great American Autoworkers". Trump wrote on Twitter. Obama makes case for tighter regs on tech Senate GOP sounds alarm over Trump's floated auto tariffs Administration works to assuage critics over ZTE deal MORE's (Texas) office before transferring to a secure room in the basement - that legislative action was still on the table. "Canada has been very hard to deal with", Trump said Wednesday.

He then brought up NAFTA, and how challenging discussions have been, eventually calling Canada "very hard".

A White House official said that the move to initiate the probe was partly aimed at pressuring Mexico and Canada to make concessions in order to reach a NAFTA deal.

"To treat auto imports like a national security threat would be a self-inflicted economic disaster for American consumers, dealers, and dealership employees", said the American International Automobile Dealers Association, which represents franchises that sell foreign brands like Toyota (TM) and Volkswagen (VLKAY). Formal re-negotiations between Canada, Mexico and the United States have been ongoing since last summer.

"I'm absolutely convinced that in the face of the insults, in the face of these shows of bravado, the worst thing that Mexico could do would be to become intimidated and sign an agreement under unfavorable conditions", he said.

"If now the USA would unilaterally raise auto tariffs, for instance, it obviously would be against the WTO", Mr Katainen said, in reference to the World Trade Organisation, the worldwide arbiter on trade. "We will win, and we'll win big".

In an interview Thursday on CNBC, Commerce Secretary Wilbur Ross, who is leading the investigation, said the administration was defining national security "broadly", to include the impact on employment and other factors.

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