Trump administration explores tariffs on autos, auto parts

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Trump administration explores tariffs on autos, auto parts

2018-05-25 11:46 Last Updated At：11:46

The Trump administration 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. President Donald Trump predicted earlier that U.S. automakers and auto workers would be "very happy" with the outcome of the NAFTA talks.

The White House said in a statement Wednesday that the president had asked Commerce Secretary Wilbur Ross to consider whether the imports of automobiles, including trucks, and automotive parts threaten U.S. national security. The president said in the statement that "core industries such as automobiles and automotive parts are critical to our strength as a Nation."

The U.S. remains far apart on the talks over rewriting the trade pact with Canada and Mexico, with the discussions at an impasse over rules for car production. The initiation of the trade investigation could be seen as an attempt to gain leverage in the talks with the two U.S. neighbors. Treasury Secretary Steven Mnuchin has said that efforts to renegotiate the trade agreement could spill into next year.

Nearly half of the vehicles sold in the U.S. are imported, with many coming from assembly plants in Mexico and Canada. During a meeting with auto executives earlier this month, Trump said he would push for an increase in the production of vehicles built at U.S. plants. He has also criticized European Union auto imports and tariffs and earlier this year threatened a "tax" on European imports.

A person familiar with the discussions said the president has suggested seeking new tariffs of 20 to 25 percent on automobile imports. The person spoke on condition of anonymity and was not authorized to speak about private deliberations.

Trump brought a little-used weapon to his fight to protect auto workers: Section 232 of the Trade Expansion Act of 1962. The provision authorizes the president to restrict imports and impose unlimited tariffs on national security grounds.

The Trump administration used that authority in March to slap tariffs of 25 percent on imported steel and 10 percent on aluminum imports. Until then, the United States had pursued only two such investigations since joining the World Trade Organization in 1995. Both times — in a 1999 case involving oil imports and a 2001 case involving iron ore and steel imports — the Commerce Department refused to recommend sanctions.

Critics fear that other countries will retaliate or use national security as a pretext to impose trade sanctions of their own.

Daniel Ujczo, a trade lawyer with Dickinson Wright PLLC, said the tariff threat is likely meant to pressure Mexico into accepting U.S. demands for NAFTA changes that would shift more auto production to the U.S. from Mexico. But he questioned whether it would work.

"I do not believe that it will have the desired effect," Ujczo said. "Everyone knows that (the investigation) will take too long and has no chance of surviving any legal challenge."

Trump offered a hint about the move earlier in the day on the South Lawn, telling reporters that "you'll be seeing very soon what I'm talking about." He noted that both Mexico and Canada have been "very difficult to deal with" during the negotiations.

"I am not happy with their requests. But I will tell you in the end we win, we will win and will win big," Trump said before departing for New York. He said America's neighbors have been "very spoiled because nobody's done this but I will tell you that what they ask for is not fair. Our auto workers are going to be extremely happy."

Mexico has so far resisted U.S. attempts to get higher regional content rules in the auto industry and move production to higher-wage U.S. and Canadian factories. The U.S. has also sought to change NAFTA's dispute-resolution system, and include a sunset clause that would allow countries to exit after five years.

The Trump administration has already missed an informal deadline that had been set by House Speaker Paul Ryan to get a revamped deal to Congress in time for lawmakers to vote on it in a midterm election year. Mexico, meanwhile, will hold presidential elections on July 1 and Andres Manuel Lopez Obrador, the leftist candidate who has led in polls, has said the re-negotiation shouldn't be rushed through and should be left to the winner of the election.

If the negotiators fail to agree to a revamped version of NAFTA, the discussions could be extended into 2019. Trump could also carry out his threat to abandon the agreement that he has long railed against, throwing commerce among the three countries into disarray.

Trump has sought to overhaul NAFTA in an effort to return auto production to the United States and reduce America's trade deficit. The U.S. has been demanding that a percentage of a car's content of auto parts originate in a country — the U.S. or Canada — with average auto worker wages of about $15 an hour to qualify for NAFTA's duty-free status.

But companies have built supply chains that straddle NAFTA borders and changing the rules could disrupt their operations, raise costs and potentially put them at a competitive disadvantage with manufacturers in Asia and Europe.

Biden vows to shield US steel industry by blocking Japanese merger and seeking new Chinese tariffs

2024-04-18 09:55 Last Updated At：10:00

PITTSBURGH (AP) — President Joe Biden suggested to cheering, unionized steelworkers on Wednesday that his administration would thwart the acquisition of U.S. Steel by a Japanese company, and he called for a tripling of tariffs on Chinese steel, seeking to use trade policy to win over working-class votes in the battleground state of Pennsylvania.

The Democratic president’s pitch comes as Donald Trump, his likely Republican opponent, tries to chart a path back to the White House with tough-on-China rhetoric and steep tariff proposals of his own.

During a visit to the Pittsburgh headquarters of United Steelworkers, Biden said U.S. Steel “has been an iconic American company for more than a century and it should remain totally American.”

Administration officials are reviewing the proposed acquisition of U.S. Steel by Japan’s Nippon Steel, and Biden said last month he would oppose the deal, saying it was “vital for it to remain an American steel company that is domestically owned and operated.”

But in front of a union audience, he went much further in pledging he may block it.

“American-owned, American-operated by American union steelworkers — the best in the world — and that’s going to happen, I promise you,” he said.

In another step that his administration argues can protect domestic steelworkers, Biden also announced that he will push for higher tariffs on Chinese steel and aluminum, aiming to insulate American producers from a flood of cheap imports.

Biden's push on steel reflects the intersection of international trade policy with his reelection effort, although the White House insisted they were more about shielding American manufacturing from unfair trade practices overseas than firing up a union audience.

The current tariff rate is 7.5% for both steel and aluminum but could climb to 25% under Biden's proposal. The president said he was asking his trade representative to seek the increase, and separate tariffs of 10% on aluminum and 25% on steel would also remain in place.

The U.S. imported roughly $6.1 billion in steel products in the 12 months ending in February 2023, but just 3% of those imports came from China, according to Census Bureau figures. Citing existing trade barriers, the American Iron and Steel Institute said China last year accounted for even less — just 2.1% of U.S. steel imports — making it America’s seventh-biggest source of foreign steel.

However, a senior administration official said there are concerns about China ramping up exports, making the higher tariff levels necessary as a preventative measure.

Liu Pengyu, a spokesman for the Chinese Embassy in Washington, said the “U.S. is making the same mistake again and again” by seeking increased tariffs. In a statement, he also dismissed levies already in place as “the embodiment of unilateralism and protectionism of the U.S.”

Biden insisted that getting tougher on China was sound policy, including when it comes to preventing the exportation of advanced technologies that could “undermine our national security.”

He said he delivered a similar message to Chinese President Xi Jinping during previous conversations, telling him, “You’ll use them for all the wrong reasons, so you’re not going to get those advanced computer chips.”

Biden criticized Trump for failing to take such steps, saying that “for all his tough talk on China, it never occurred to my predecessor to do any of that.”

The administration also promised to pursue investigations against countries and importers that try to saturate existing markets with Chinese steel, and said it was working with Mexico to ensure that Chinese companies cannot circumvent the tariffs by shipping steel there for subsequent export to the United States.

“The president understands we must invest in American manufacturing. But we also have to protect those investments and those workers from unfair exports associated with China’s industrial overcapacity,” said White House national economic adviser Lael Brainard.

U.S. Trade Representative Katherine Tai also announced Wednesday that her office, acting on a petition from five national labor unions, was investigating China for “targeting the maritime, logistics and shipbuilding sectors for dominance.”

China's Commerce Ministry responded hours later that the “U.S. petition is full of false accusations.”

It ”misinterprets normal trade and investment activities as damaging to U.S. national security and corporate interests," the ministry said in a statement. “And blames China for the U.S.'s own industrial issues, lacking factual basis and running counter to common sense in economics.”

China produces about half of the world’s steel and is making far more than its domestic market needs. It sells steel on the world market for less than half what U.S.-produced steel costs, senior Biden administration officials said.

The first step to the higher tariffs is the completion of a review of Chinese trade practices. Once Biden gives the official authorization, there will be a public notice and a comment period that could take weeks.

Biden is on a three-day Pennsylvania swing that began in his childhood hometown of Scranton on Tuesday and will include a visit to Philadelphia on Thursday. After ignoring the first two days of Trump’s hush money trial in New York, Biden made a veiled reference to it on Wednesday, joking that his predecessor is “busy right now.”

Biden's announcement on steel tariffs was cheered by U.S. steelmakers. Kevin Dempsey, president of the American Iron and Steel Institute, accused China of disrupting “world markets both by subsidizing the production of steel and other products, and by dumping those products in the U.S. and other markets.”

To coincide with the announcement, Biden’s campaign released a 60-second ad that will air on Pennsylvania television for the next five days. It features a steelworker, who is also a small-town mayor, praising the president’s economic policies.

Higher tariffs can carry major economic risks. Steel and aluminum could become more expensive, possibly increasing the costs of cars, construction materials and other key goods for U.S. consumers. Also, inflation has already been a drag on Biden's political fortunes, and his turn toward protectionism echoes Trump's playbook.

The former president, who has said he would never allow the acquisition of U.S. Steel by a foreign company to go through, imposed broader tariffs on Chinese goods during his administration and has threatened to increase levies on Chinese goods unless they trade on his preferred terms as he campaigns for another term.

An outside analysis by the consultancy Oxford Economics has suggested that putting in place the tariffs Trump has proposed could hurt the overall U.S. economy.

Weissert reported from Washington. Associated Press writer Josh Boak in Washington contributed to this report.