US car buyers are facing sticker shock as President Trump weighs new tariffs on imported cars and auto parts.
The trading department concludes its inquiry into whether imported cars and parts constitute a national security threat under section 232 of the US trade law, with a deadline on Sunday to submit its results to the president.
Mr. Trump has already expressed support for taxes of 20%. If the tariffs are imposed, the prices of cars from Japan, Germany, South Korea will rise sharply, provided these countries do not receive exemptions.
But buyers of domestically-produced cars could shudder more if tariffs were imposed on components, as between 40% and 50% of the average American-built vehicle is assembled with foreign components, the Center for Automotive Research estimates.
"These rates are a tax on US companies, and ultimately they will be an additional expense for the US consumer," said Ann Wilson, senior vice president of the Motor and Equipment Manufacturer Association, representing the auto-part industry.
Mr. Trump has speculated on previous tariffs that his administration has developed under a national security law ̵
However, in the case of car industry tariffs, there has hardly been any support from the domestic industry, even though the United Autos have expressed cautious support.
"In our district there have been no fans of any kind of a fare," Rep said. Jackie Walorski, a Republican representing an Indiana congressional district that produces auto parts and recreational vehicles – which she feared could face retaliation in a vehicle war.
Detroit auto makers, foreign brands operating in the United States and auto parts vendors worry that any tasks will interfere with their increasingly international supply chains or retaliate tari ffs on their exports. Car manufacturers and sub-manufacturers already pay more for steel and aluminum because of tariffs. Dealers are worried about falling sales.
"There is a reason why we have seen a real slowdown in investment activity," says Kristin Dziczek, economist at the Industry-Supported Automotive Research Center. "People are waiting to see where the chips are falling."
It is not clear whether the trade department's submission of the report will remove much uncertainty.
Industrial personnel do not expect the report to be published first and the Department is likely to recommend several possible tools to the president, including large tariffs on imported cars and potential trade barriers on parts used in autonomous and electric vehicles, they said.
The Ministry of Commerce refused to comment on the report, which gives Mr. Trump 90 days to announce tariffs or other obstacles. Then Mr. Trump imposed similar steel and aluminum tariffs, getting some countries temporary exemptions during trade negotiations, but eventually the EU, Canada and Mexico were subjected to the tasks that triggered retaliation.
Ms. Wilson said the report has the potential to stir widespread opposition to Mr. Trump's trade policies.
"The policy makers who have not really taken into account the effects of the tariffs must really think about the consequences it will have for suppliers in their states – and that will have a negative impact," she said.
Republicans are among those who call on Mr Trump's trading team to leave autos alone.
"I don't think that minivans from Canada or other allies threaten our national security, so I hope the administration will take a step back and reconsider any auto-rates," said Senator Rob Portman, a republican from Ohio. .
Herr. However, Trump poses the threat of car prices by bringing the EU and Japan to the negotiating table for possible trade agreements with the Trump administration.
"If these tariffs and barriers are not soon broken down and removed, we place a 20% tax on all their cars coming into the United States," Mr. Trump tweeted last year with reference to the EU.
Last year, Trump and EU Commission President Jean-Claude Juncker agreed to work for an agreement on cutting tariffs on industrial goods and increasing purchases of US soybeans and natural gas. Both parties agree to avoid imposing surcharges on each other during active negotiations, where each site is ready to end talks in case of new tariffs for the auto industry or other products
"If this engagement was not respected, both negotiations and the process will be severely compromised, "said EU Ambassador David O & # 39; Sullivan. "We are waiting with interest to see what the report will say and how t he president will respond."
Trump administration complains that US cars are facing a 10% tariff in Europe while European cars have a duty at only 2.5% when they enter the United States, according to complicated agreements concluded through the World Trade Organization.
In addition to the EU, Mr. Trump also made bilateral trade negotiations in Japan with Japan, which sent $ 40 billion in passenger cars to the United States last year.
Former US trade officials say Trump is seeking to repeat the concessions made by the Obama administration from Japan when negotiating the 12-nation Trans-Pacific Partnership agreement – as Mr. Trump left before it was ratified. Japanese Prime Minister Shinzo Abe said last year that Mr Trump has promised not to impose tariffs while negotiating.
Write to William Mauldin at email@example.com and Mike Colias at Mike.Colias@wsj.com