Trump orders Commerce Department to examine tariffs on auto imports

The influential lobbying group's head urged the administration to reverse course.

Nobody asked for it, few seem to want it and yet the Trump administration is considering imposing tariffs on imported cars and trucks, threatening not just a shake-up of the global auto industry but political discord even among the president's allies.

"I think they would prefer us not to act on it, but I think Congress is going to do what it needs to do", Rubio said.

How many are tied to the auto industry? "We are extremely concerned".

In March, Germany's automotive industry association said a trade war between the US and Europe "must be avoided at all costs".

Japanese and European automakers did not issue individual comments but some referred to Global Automakers, based in Washington, an industry group of worldwide automakers.

"If these reports are true, it's a bad day for American consumers", John Bozzella, CEO of Global Automakers, said in a statement.

Commerce said the probe would determine whether lost domestic production had weakened the U.S.

Roughly 12 million cars and trucks were produced in the United States a year ago, while the country imported 8.3 million vehicles worth $192 billion. This could also lead to less choice.

In addition to the 25% tariffs on steel and 10% tariffs on aluminum, the administration has threatened tariffs on $50bn worth of Chinese goods over intellectual property complaints. Japan estimates they will cost it about 50 billion yen ($450 million) a year.

"There is evidence suggesting that, for decades, imports from overseas have eroded our domestic auto industry", the secretary wrote.

The Commerce Department investigation could take several months to complete and would likely end with Commerce making recommendations on whether and how to restrict auto imports, which Trump could then choose whether or not to accept.

It was unclear how the administration would be able to use a measure aimed at ensuring national security in the vehicle sector. He has slapped them on some steel and aluminum imports, and warned China that he might tax $150 billion worth of its imports to the United States. This included 2.4 million from Mexico, 1.8 million from Canada, 1.7 million from Japan, 930,000 from South Korea and 500,000 from Germany, according to US government statistics.

Mexico is the top exporter of passenger vehicles and light trucks to the U.S followed by Japan, Canada, Germany and South Korea, according to the Department of Commerce. "Free trade creates jobs, wealth and economic growth", a spokesman said, adding that its plant in SC to produce its Volvo brand cars showed its commitment to the country. "No other country has higher absolute losses to fear than Germany", said Gabriel Felbermayr, foreign trade expert at Ifo.

Shares in BMW, Daimler and Volkswagen each slid by more than two percent in value on the Frankfurt Stock Exchange on Thursday, on news of the USA probe.

"The Honda Accord is not a threat to our national security". The move might also be a way for Trump to build up support with workers and unions ahead of November's midterm elections. It is seen as part of Trump's " America First" promise to win back manufacturing jobs lost to overseas competitors.

However, while President Trump has long promised to protect the USA auto industry, it's far from clear that the industry itself wants protecting. In that document, "vehicles" are listed as "critical elements of our manufacturing and defense industrial bases, which we must defend against unfair trade practices and other abuses". Neither has a presence in the USA, though PSA has plans for a return to the American market.

Despite the national security justification, most analysts viewed the move as a tactic for Trump to get tough in trade negotiations.

Still, the action won praise from auto workers, a key constituency in the battleground states of MI and OH which Trump carried in 2016.

  • Rogelio Becker