US President Donald Trump on Friday announced a six-month delay on imposing steep tariffs on vehicle imports, seeking to pressure Europe and Japan into bargaining-table concessions on trade.
The decision marked a temporary reprieve from what would have been a sizable escalation in Trump’s multifront trade wars.
Trump’s threat targets a major chunk of global economic activity with profound disruptions. Hundreds of billions of dollars in vehicles are manufactured, shipped and sold internationally every year.
In a proclamation, the president directed US Trade Representative Robert Lighthizer to update him within 180 days on the outcome of negotiations with the EU, Japan and “any other country” Lighthizer deems appropriate.
By leaving the threat of tariffs hanging, Trump’s move raises the temperature in European capitals already angered by the imposition of punishing US duties on steel and aluminum last year.
Trump’s decision also preserved a truce declared last year with European Commission President Jean-Claude Juncker, in which both sides agreed to cease trade hostilities while efforts continued to resolve the trade dispute.
Despite the decision, the US president continued his attacks on the EU’s trade policy.
“The European Union treats us, I’d say, worse than China — they’re just smaller,” Trump said at an event.
“They don’t want our farmers, they don’t want our cars... They send Mercedes-Benz here like they’re cookies,” Trump said, adding that “they take advantage of us on trade.”
“We all love Europe, but it’s not fair,” he added.
In response to the US metal tariffs, the EU last year imposed stinging duties on US exports like motorcycles, orange juice, whiskey and blue jeans, and threatened to retaliate further should the vehicle tariffs be imposed.
European Commissioner for Trade Cecilia Malmstrom confirmed an existing offer that “the EU is prepared to negotiate a limited trade agreement including cars.”
The six-month delay had been expected this week, as industry sources had confirmed media reports that Trump would hold off — delighting markets, which had feared sharp economic consequences of such a move.
In his proclamation, Trump described the US vehicle sector as facing decline due to unfair foreign competition.
A report by US Secretary of Commerce Wilbur Ross concluded that the US’ shrinking share of the vehicle market jeopardized its research, development and manufacturing — all “vital to national security,” according to Trump.
In a conclusion likely to invite challenges from manufacturers and industry analysts, Trump said that the US’ defense industrial base relied on the domestic vehicle sector for technological advances essential to US “military superiority.”
Citing Ross’ conclusions, Trump pointed to a doubling of US imports over the past 34 years, but accused Europe and Japan of raising “significant barriers” to accepting US exports in return.
In that same period, the domestic market share of US-owned manufacturers fell to just 22 percent, from 67 percent, he said.
“In light of all of these factors, domestic conditions of competition must be improved by reducing imports,” Trump said.
Reacting to the announcement, Federation of German Industries president Dieter Kempf said that “cars do not threaten the national security of the United States.”
Japanese automaker Toyota, which has factories and research centers in the US, also strongly rejected the notion.
“Today’s proclamation sends a message to Toyota that our investments are not welcomed, and the contributions from each of our employees across America are not valued,” the automaker said in a statement. “If import quotas are imposed, the biggest losers will be consumers who will pay more and have fewer vehicle choices.”
The US imported almost US$200 billion of vehicles in 2017, the proclamation said.
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