Trump delays tariffs on car imports

Business
Workers in the auto parts production line of the Bosch factory in San Luis Potosi, MexicoImage copyright Getty Images

US President Donald Trump has delayed a decision on whether to impose tariffs on imports of cars and car parts.

The White House has put back the decision by six months to allow more time for trade talks with the European Union and Japan.

Tariffs of up to 25% on imported cars and car parts were under consideration.

A report by the Commerce Department claimed that imports of foreign-made cars and auto parts into the US were a threat to national security.

The report has not been published, but in Friday’s announcement Mr Trump cited its findings which conclude that US carmakers are missing out on revenues to invest in research and development (R&D).

It said: “The lag in R&D expenditures by American-owned producers is weakening innovation and, accordingly, threatening to impair our national security.”

The President said he agreed with the study’s finding that imported cars and trucks were “weakening our internal economy”.

Trade relations

The delay comes at a critical time for the US and its trade relations with other countries.

On Monday, Beijing implemented retaliatory tariffs on US imports after Mr Trump lifted levies on a further $200bn of Chinese goods, following a breakdown in trade talks between the two nations.

The US President characterised it as a “little squabble”.

However, shortly afterwards, Mr Trump declared a “national emergency” to protect US computer networks from “foreign adversaries”.

While the announcement did not name any individual companies, it was widely perceived to be directed at Huawei, the Chinese telecoms equipment maker, which has faced claims its products could be used by China for surveillance.

Huawei has vehemently denied the allegations.

Retaliation

Mr Trump has taken an aggressive attitude in the past towards cars made outside the US.

In 2017, he warned car makers that if they built cars in Mexico for export to the US then they would attract a 35% tax.

Most of the major car firms have plants in Mexico and the industry has warned that tariffs would result in higher prices and threaten jobs in the US.

Image copyright Getty Images
Image caption Cecilia Malmstrom said the EU would respond if the US lifted car tariffs

The EU has threatened to respond if the US lifts tariffs on imports of European cars.

Cecilia Malmstrom, European Commissioner for Trade, told Bloomberg earlier this week that the EU was already considering which US products to target with higher levies if Mr Trump’s administration went ahead with the move.

She said: “We are already preparing a list of possible items that would be on that list.

“The moment this is official – if this happens, I still hope it won’t – then we would publish that list.”

Last year, the EU imposed higher tariffs on some US goods, including Harley Davidson motorcycles, in retaliation for Washington’s decision to raise duties on imported steel and aluminium.

https://www.bbc.co.uk/news/business-48309703

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