Published: Sat, May 26, 2018
World | By Camille Rivera

Trump's Talk of U.S. Auto Tariffs Sends Carmakers' Stocks Tumbling

Trump's Talk of U.S. Auto Tariffs Sends Carmakers' Stocks Tumbling

U.S. President Donald Trump is threatening to throw another monkey wrench into global trade with a 25 percent tariff on autos and auto parts.

American Commerce Secretary Wilbur Ross had announced Wednesday he had initiated a so-called Section 232 investigation on auto trade - which would provide the legal basis to impose tariffs, if his department finds imports threaten U.S. national security - after speaking with President Donald Trump on the matter.

A new tariff on cars, trucks and SUVs could face opposition from some industry groups, with foreign automakers and their dealers likely to be concerned about a price disadvantage against domestic rivals.

The probe is being launched under Section 232 of the Trade Expansion Act of 1962.

Officials confirmed overnight that an inquiry had been opened into whether imported vehicles and parts "threaten to impair the national security" of the United States.

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Canada and Mexico are the top two vehicle suppliers to the United States, so any tariffs would hurt them the most.

"China will pay close attention to the progress of the USA investigation, conduct a comprehensive assessment of the possible impact and firmly defend our legitimate rights and interests", Gao told reporters at a news conference.

Trump, who has repeatedly broken with his party on trade issues, found himself facing immediate backlash from high-profile members of his party earlier this year after he announced that he would place tariffs on steel and aluminum imports.

The auto tariffs would also hurt Asian carmakers, including Toyota Motor Corp, Nissan Motor Co and Honda Motor Co, which all count the USA as a key market. Last week, the top USA trade official said the three countries were "nowhere close to a deal".

The US president told his core supporters on Twitter that the hard times for US autoworkers would soon be over.

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Earlier Wednesday, Trump, who has repeatedly pledged to revive American manufacturing, said that "big news" was coming that would be welcomed by USA auto workers but he gave no details.

Of the cars imported, 2.4 million come from Mexico and 1.8 million from Canada.

Canada and Mexico are already locked in tortuous negotiations with the Trump administration to revamp the North American Free Trade Agreement that links the three countries.

German automakers reacted with dismay Thursday as the US Commerce Department said tariffs on vehicle imports could be on the horizon, potentially opening a new front in a burgeoning transatlantic trade conflict.

Trump said what Canada and Mexico are asking for in a renegotiated NAFTA is "not fair" and he called both countries "spoiled because nobody's done this" - presumably referring to previous American administrations that have not stood up to their NAFTA partners.

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Although a large portion of the US's most popular vehicle models, including those from foreign brands (such as the upcoming BMW X7), are already manufactured within its borders, many are imported from other countries.

"They have been taking advantage of the United States for a long time".

U.S. Senate Finance Committee Chairman Orrin Hatch said possible auto tariffs are "deeply misguided", and urged the administration "to remain focused on addressing China's trade practices".

This isn't the first time Trump has called Canada hard. President Donald Trump said in a tweet on Wednesday. The E.U. adds 10 percent to the cost of imported American models, while the United States imposes a levy of 2.5 percent on most imported cars and 25 percent on most pickups.

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