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Trump expected to delay auto tariffs decision by up to six months: officials

Stock MarketsMay 15, 2019 11:56AM ET
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© Reuters. U.S. President Trump speaks to workers as he visits Cameron LNG Export Facility in Hackberry, Louisiana

By David Shepardson

WASHINGTON (Reuters) - U.S. President Donald Trump is expected to delay a decision on imposing tariffs on imported cars and parts by up to six months, three Trump administration officials told Reuters, , avoiding opening yet another front in his global trade battles.

A formal announcement is expected by Saturday, the due date for Trump to make a decision on recommendations by the Commerce Department to protect the U.S. auto industry from imports on national security grounds, the officials said.

A White House spokesman declined to comment.

They added that the administration has drafted language to formally delay a decision on the tariffs that is due by May 18.

Reuters reported last week that automakers expected Trump to delay the decision as trade negotiations get underway with the European Union and Japan.

General Motors Co (NYSE:GM), Volkswagen (DE:VOWG_p) AG, Toyota Motor Corp and others have warned of the damaging impacts of imposing tariffs of up to 25 percent on imported cars and parts.

The White House has held a series of high-level meetings on the issue in recent days, and administration officials have repeatedly told automakers they planned to delay the decision.

In February, the Commerce Department submitted its "Section 232" national security report to the White House. The agency was investigating whether imports harmed U.S. national security by weakening American automakers' ability to invest in future technologies. The Commerce Department's specific recommendations have not been revealed.

A series of announcements by GM last week of $700 million in investments in three Ohio plants and efforts to sell the company's closed Lordstown plant had made Trump more inclined to delay the tariffs, administration officials told Reuters last week.

At the same time, Trump has escalated his trade war with China, sharply increasing tariffs on $200 billion worth of Chinese goods and launching public consultations on remaining Chinese imports of about $300 billion.

The auto tariffs face wide opposition in Congress. The White House has refused to turn over the Commerce Department report to Republican Senator Chuck Grassley, chairman of the Senate Finance Committee, who has been demanding to see it.

Last week, 159 House of Representatives members led by Ways and Means Committee Vice Chair Terri Sewell wrote White House National Economic Council Director Larry Kudlow to urge him to advise Trump against “imposing trade restrictions that could harm the auto sector and the American economy.”

The letter from 79 Democrats and 81 Republicans, which was seen by Reuters, warned that imposing tariffs on parts in cars “may overlap with motorcycles, recreational vehicles, construction equipment, heavy-duty trucks, farming equipment, powersports vehicles, and others.”

Administration officials have said tariff threats on autos are a way to win concessions from Japan and the EU. Last year, Trump agreed not to impose tariffs as long as talks with the two trading partners were proceeding in a productive manner.

The industry says tariffs of up to 25 percent on millions of imported cars and parts would add thousands of dollars to vehicle costs and potentially lead to hundreds of thousands of job losses throughout the U.S. economy.

"The case remains clear – cars are not a national security threat," the Alliance of Automobile Manufacturers, a trade group representing GM, VW, Toyota and other producers, said in a statement. "We are deeply concerned that the administration continues to consider imposing auto tariffs."

An auto industry research report released last year estimated that U.S. light-duty vehicle prices would increase by $2,750 on average, including U.S.-built vehicles, reducing annual U.S. sales by 1.3 million units and forcing many consumers to the used-car market.

Trump expected to delay auto tariffs decision by up to six months: officials
 

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