President Donald Trump decided on Friday to hold off on slapping a 25 percent tariff on imports of automobiles and auto parts, giving Japan and the European Union six months to renegotiate their trade deals with the U.S.
“I concur in [Commerce Secretary Wilbur Ross’] finding that automobiles and certain automobile parts are being imported into the United States in such quantities and under such circumstances as to threaten to impair the national security of the United States,” Trump said in a proclamation outlining his decision, according to Politico.
The Japanese automaker’s comments on Friday came after the White House said U.S.Trade Representative Robert Lighthizer will “address the threatened impairment” of national security from auto imports.
“Our operations and employees contribute significantly to the American way of life, the U.S. economy and are not a national security threat,” Toyota said in a statement.
Toyota was not alone in slamming Trump’s comments on imported autos being a “national security threat.” In a Tweet, EU Trade Commissioner Cecilia Malmstrom also denounced Trump’s comments, saying “we completely reject the notion” that Europe’s car exports are a national security threat.
We note that US postpones decision on car tariffs for 180 days. But we completely reject the notion that our car exports are a national security threat. The EU is prepared to negotiate a limited trade agreement incl cars, but not WTO-illegal managed trade.
— Cecilia Malmström (@MalmstromEU) May 17, 2019
Toyota is in the middle of building a $1.6 billion joint venture assembly plant in Limestone County, Alabama and said in March it will invest $13 billion in U.S. operations by 2021.
Trump apparently forgets that Toyota has been a part of American industry for more than 60 years, investing over $60 billion in the country, while employing more than 475,000 Americans. “If import quotas are imposed, the biggest losers will be consumers who will pay more and have fewer vehicle choices,” Toyota said.
It appears that Trump will be exempting South Korea from the threatened tariffs. This is because the country has already renegotiated its free trade pact with the U.S. However, a group representing American automakers – Ford, General Motors and Fiat Chrysler – applauded Trump’s restraint in holding off on additional tariffs for six more months.
“We will continue to urge the administration to reject imposing higher auto tariffs,” Matt Blunt, president of the American Automotive Policy Council, said in a statement. He added that imposing new tariffs “would weaken global competitiveness and invite retaliation from our trading partners, which could harm jobs and investment in the U.S.”
About the only thing that seems to be working for Trump is his discovery of Section 232 of the 1962 Trade Expansion Act. The cold-war law has never been used like Trump is using it, and Senate Finance Chairman Chuck Grassley (R-Iowa) is working to have it updated.
“As the president knows, I’m not a fan of tariffs,” Grassley said. “And I have serious questions about the legitimacy of using national security as a basis to impose tariffs on cars and car parts.”
