Trump Initiates Trade Inquiry That Could Lead to Tariffs on Foreign Cars

Trump Initiates Trade Inquiry That Could Lead to Tariffs on Foreign Cars

Trump May Impose Tariffs on Foreign Autos

President Trump is considering authorizing an investigation that could ultimately result in tariffs on foreign-made cars, people familiar with the deliberations said.CreditZack Wittman for The New York Times

President Trump is considering authorizing a sweeping trade investigation into imported autos that could ultimately result in tariffs on foreign-made cars, people familiar with the deliberations said, adding another wrinkle to a trade approach that has already put the United States’ allies on the defensive.

The investigation, which would take months to conduct, could be carried out under the same legal statute that the administration used to impose tariffs on steel and aluminum imports. The statute gives the president broad authority to restrict imports that threaten national security.

In a Twitter post on Wednesday morning, the president hinted at a pending announcement concerning the car industry.

“There will be big news coming soon for our great American Autoworkers,” Mr. Trump said. “After many decades of losing your jobs to other countries, you have waited long enough!”

Some auto industry representatives worried that the plan could raise prices for cars and trucks in the United States, and end up leading to a less competitive American industry and fewer choices for American consumers.

“If these reports are true, it’s a bad day for American consumers,” said John Bozzella, the chief executive of Global Automakers, a trade group. “To our knowledge, no one is asking for this protection.”

In a memo last April, the White House described several sectors as “critical elements of our manufacturing and defense industrial bases, which we must defend against unfair trade practices and other abuses.” That included vehicles, along with products like steel, aluminum, aircraft and semiconductors.

The Trump administration has already deemed imports of steel and aluminum a threat to national security, saying foreign metals are degrading the United States’ manufacturing base. It is also considering tariffs on as much as $150 billion of Chinese imports as retaliation for China’s forced coercion of American intellectual property, which the administration has also declared a threat to national security.

Trade experts said a finding by the administration that imported autos pose a national security threat would most likely trigger legal challenges at the World Trade Organization. The European Union, Japan and other allies are already challenging the Trump administration’s claim that imports of steel and aluminum put American national security at risk. Extending that argument to automobiles would probably be met with even greater skepticism.

The Trump administration has tried to use the steel and aluminum tariffs as a bargaining chip to persuade other countries to voluntarily restrain their metal shipments to the United States or make other trade concessions. The administration may be looking to use the auto tariffs similarly, as leverage to force concessions from trading partners like Canada and Mexico.

Negotiations over a revised North American Free Trade Agreement have largely stalled over auto rules, including how much of a car’s content must be manufactured in North America — and in the United States — to qualify for Nafta’s zero tariffs.

The White House is also locked in a trade dispute with China, which recently said it would lower tariffs on imported United States autos as part of a peace offering.

Chad Bown, a senior fellow at the Peterson Institute for International Economics, pointed out that 98 percent of American imports of passenger cars last year came from five American allies: Mexico, Canada, the European Union, Japan and South Korea.

“This is not about national security,” Mr. Bown said. “After the steel and aluminum high, President Trump has now become addicted to tariffs. He is now clearly abusing this national security law simply to get his tariff fix. And this law is the easiest access he has found.”

Mr. Trump has made the auto industry a major focus of his economic policy, seeing carmakers as an example of an American sector weakened by global offshoring.

While carmakers have welcomed some of the measures proposed by the Trump administration, they have chafed at the White House’s approach to Nafta and its steel and aluminum tariffs, which they say will raise prices and ultimately be passed on to consumers. Many auto suppliers also depend on China for parts they cannot source in the United States, and the potential trade war with China has put several companies on edge.

Many inside and outside the auto industry say the administration’s approach could backfire by raising prices for American-made products, potentially slowing sales and encouraging more companies to move abroad.

Phil Levy, a senior fellow at the Chicago Council on Global Affairs, criticized the idea as “an unusually ill-conceived trade move.”

“It seems to imagine a world in which each country produces its own automobiles and then they swap them back and forth. In fact, we live in a world in which viable auto companies are heavily involved in global supply chains and in which foreign-owned companies have well-established factories in the United States,” he said. “It would harm U.S. consumers at the margin, while undermining the global trading system and inviting certain retaliation.”


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