President Trump called for tariffs on imported cars, trucks and auto parts Wednesday, potentially expanding to the auto industry the same protectionist measures hes threatened on aluminum and steel.
Trump said he asked Commerce Secretary Wilbur Ross to investigate whether the auto imports are a threat to national security. If so, he would be able to institute tariffs under Section 232 of the Trade Expansion Act of 1962 — one of the strongest trade tools in the presidents arsenal.
"Core industries such as automobiles and automotive parts are critical to our strength as a nation," Trump said in a short statement released by the White House Press Office.
John Bozzella, CEO of Global Automakers, which represents foreign automakers doing business in the U.S. and some domestic parts suppliers, criticized the move.
“If these reports are true, it’s a bad day for American consumers," he said. "The U.S. auto industry is thriving and growing. Thirteen, soon to be 14 companies, produced nearly 12 million cars and trucks in America last year. To our knowledge, no one is asking for this protection. This path leads inevitably to fewer choices and higher prices for cars and trucks in America.”
The surprise announcement came the same day Trump touted "big news coming soon" for U.S. autoworkers. "After many decades of losing your jobs to other countries, you have waited long enough!" he said.
The Commerce Department said it immediately launched the national security investigation required by law to justify the tariffs.
“There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry,” Ross said in a statement. “The Department of Commerce will conduct a thorough, fair, and transparent investigation into whether such imports are weakening our internal economy and may impair the national security.”
The announcement came as talks with Mexico and Canada to rewrite the North American Free Trade Agreement have appeared to languish. Speaking with reporters outside the White House on Wednesday, Trump connected the issues saying that both countries had been "very difficult to deal with" but promising that "our autoworkers are going to be extremely happy. "
A key sticking point in those talks has been U.S. demands to impose tighter controls on the auto market, specifically how of a vehicle must be manufactured in the United States to qualify for tariff-free trade.
The Commerce Department noted that the percentage of imported cars sold in the United States has risen from 32% to 48% over the last two decades, as American auto industry jobs have declined.
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Trump used the same provision of U.S. trade law to impose a 25% tariff on steel and a 10% tariff on aluminum in early March. The administration offered temporary exemptions to the European Union, Canada, Mexico and a number of other allies at the time and has extended those initial exemptions several times since.
"You dont have a country without steel," Trump repeatedly said at the time as part of the justification for the tariffs.
The barriers on steel and aluminum have remained in place for China even as the U.S. suspended tariffs for other goods as part of ongoing trade negotiations with Beijing.