By Chester Dawson and Josh Zumbrun
President Donald Trump stood by his threats to levy sweeping
tariffs on automobile imports as a way to extract concessions from
trading partners, despite opposition from the industry and
discontent in Congress with the White House's proposal.
Resistance to the tariffs is strong and growing. A coalition of
foreign and domestic auto companies, along with auto dealers and
auto-parts makers, released a letter on Wednesday urging Mr. Trump
to refrain from the tariffs.
A bipartisan group of 149 House members also urged the president
not to move forward with the tariffs. Auto unions were among the
few industry players offering qualified support for the
tariffs.
Still, at a cabinet meeting on Wednesday, Mr. Trump threatened
"tremendous retribution" against the European Union, specifically
mentioning auto tariffs, if his meeting with EU officials next week
doesn't yield what he considers a fair auto trade deal.
Mr. Trump is seeking to refocus attention on his trade agenda,
while his administration at the same time is contending with
criticism over his comments this week on alleged Russian
interference in the 2016 election.
The issue of auto tariffs is the subject of a Commerce
Department hearing on Thursday and is expected to be high on the
agenda of the July 25 White House visit by European Commission
President Jean-Claude Juncker.
Mr. Trump, a Republican, has repeatedly threatened tariffs on
imported autos and auto parts if European leaders don't make trade
concessions. The threat also hangs over negotiations with Canada
and Mexico over the North American Free Trade Agreement.
The Commerce Department hearings on Thursday are part of an
investigation aimed at justifying the auto tariffs as necessary for
U.S. national security. The administration, citing the rarely used
1962 Trade Expansion Act, also used the national-security
justification earlier this year in imposing global tariffs on steel
and aluminum imports.
If the plan is carried through, the tariffs on autos and auto
parts would be Mr. Trump's biggest tariffs yet. In 2017, the U.S.
imported $176 billion worth of passenger cars, $36 billion of
trucks and $147 billion of auto components, according to Commerce
Department data. The administration has threatened tariffs of 20%
to 25%.
The invocation of national security has drawn objections from
lawmakers. "We do not believe the imports of automobiles and
automotive parts pose a national-security threat," the House
members said in the joint letter sent Wednesday. "Rather, we
believe the imposition of trade restrictions on these products
could undermine our economic security," said the letter.
There has been growing discontent in the Senate, too. Sen. Lamar
Alexander (R., Tenn.) said Wednesday: "These tariffs are dangerous.
They are going to cost us jobs and lower our family incomes."
Mr. Alexander and Sen. Doug Jones (D., Ala.) said they would
introduce legislation aimed at halting Mr. Trump's auto tariffs.
Last week, the Senate voted 88-11 to give Congress a role in
determining when tariffs are imposed on the basis of national
security. The measure is considered largely symbolic because it
contained no specifics.
Some support for the tariff proposals has come from union
groups, which generally back Mr. Trump's trade policies and efforts
to protect U.S. jobs and domestic production capacity. The United
Auto Workers union -- which represents workers at General Motors
Co., Ford Motor Co. and Fiat Chrysler Automobiles NV -- has
expressed support for the administration's investigation, calling
it "long overdue."
But the UAW stopped short of endorsing the tariffs and instead
urged a more "targeted" approach, such as taking steps to stop the
influx of auto investment in Mexico in recent years.
Auto industry officials, meanwhile, have grown increasingly
alarmed at the prospect of adding yet another tariff to the ones
already levied by the White House on aluminum, steel and some
Chinese-made goods.
"Raising tariffs on auto and auto parts would be a massive tax
on consumers, who buy or service their vehicles," according to an
open letter to Mr. Trump that was jointly submitted by the
industry's main lobbying groups, including trade organizations that
represent the foreign and U.S.-based auto makers, as well as auto
dealers.
The Alliance of Automobile Manufacturers, which represents 12 of
the largest auto manufacturers, warned the tariffs risk triggering
a negative "domino effect" that would harm U.S. workers and the
broader economy, according to prepared remarks shared ahead of the
Commerce Department hearing.
The Commerce Department will make a determination on the
security threat and what remedies should be proposed, a process
that could take several months. No final decision can be made until
the process is complete.
Mr. Trump's remarks Wednesday made it clear he sees the tariffs
as a tool in trade talks with Europe, Canada and Mexico. "If we
don't negotiate something fair, then we have tremendous
retribution, which we don't want to use," Mr. Trump said, adding:
"Including cars, cars is the big one."
Mr. Trump has frequently cited the disparity between the 2.5%
tariff that the U.S. charges for car imports and the 10% tariff
imposed by the EU on imports there. Mr. Trump doesn't mention that
the U.S. imposes a 25% tariff on imports of light trucks, compared
with a 10% tariff from Europe.
In his remarks, Mr. Trump also cited EU trade barriers against
U.S. agriculture as a source of concern. And he said he had a "good
session" with Mexico on Nafta, which he has called unfair. He said
that the U.S. may complete separate agreements with Mexico and
Canada.
White House press secretary Sarah Sanders said Wednesday that
talks on Nafta are ongoing, and no decisions have been made.
"If we can make a bilateral deal we are certainly happy to do
that, but we are continuing conversations on both tracks," she
said.
Mr. Trump has said he plans to use the 25% tariff threat as
leverage in other trade negotiations, such as the Nafta talks. "If
they're not fine, I'm going to tax their cars coming into America,
that's a big one," Mr. Trump said earlier this month.
That has led some to question the impartiality of Thursday's
hearing. "This is a show trial," said Adam Posen, president of the
Peterson Institute for International Economics. "This is something
where they predetermined the verdict and the schedule on which the
verdict would be read."
Auto makers building cars in the U.S. and employing tens of
thousands of workers would be hit by higher costs if the tariffs
were enacted, analysts and car makers said.
Toyota Motor Corp. said it opposes the tariffs, because even
though it builds cars in the U.S., it uses foreign-sourced parts
that would be subject to the levy. For instance, about 30% of the
parts used in a U.S.-built Toyota Camry come from outside the U.S.
A tariff on those parts would increase the price of a Camry by
$1,800, the company said.
"Our viewpoint on a 25% tariff on automotive and automotive
parts is that it is something that is misguided," said Brian
Krinock, senior vice president, vehicle plants, for Toyota North
America. "We believe in the end the consumer will end up having to
pay the additional costs."
GM also has said the proposed tariffs would raise its costs,
hurt its global competitiveness and put U.S. jobs at risk.
--Michael C. Bender contributed to this article.
Write to Josh Zumbrun at Josh.Zumbrun@wsj.com
(END) Dow Jones Newswires
July 18, 2018 19:56 ET (23:56 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.