Auto Execs Say the White House Will Extend May 18 Deadline on Auto Tariffs

Auto Execs Say the White House Will Extend May 18 Deadline on Auto Tariffs

Author: FutureCar Staff    

In February, the Commerce Department submitted its national security report to the President. The report studied the effects of whether imports, such as aluminum, steel, autos, auto parts and semiconductors, pose any national security risk. Based on the findings in the report, the executive branch could use national security as a basis to restrict certain imports under "section 232" of the Trade Expansion Act of 1962.

Trump has until May 18 to act. However, according to Reuters, four auto executives who have spoken to administration officials say President Trump will likely to extend that deadline by another 180 days. He may also announce a specific date to impose new duties if no deal is reached.

Once the President Trump receives that report he has several options. He can concur or not with the Commerce Department Secretary's recommendations, or take action to "adjust the imports of an article and its derivatives" or other non-trade related actions as deemed necessary.

The Commerce Department first began its investigation in May 2018 at Trump's request to determine the effects of steel and other imports on national security. When it was submitted in February, the Trump Administration quickly put it under wraps, much to the frustration of the auto industry and members of the Senate Finance Committee.

Tariffs Face Opposition in Congress

The tariffs also face widespread opposition in Congress, however, the White House refuses to turn over the Commerce Department's report to Republican Senator Chuck Grassley, chairman of the Senate Finance Committee, who has been demanding to see it.

Administration officials say Trump could still opt to impose the tariffs by May 18, but believe that after a series of new investment announcements by automakers, including a $700 million investment by General Motors in three Ohio plants that will add 450 new manufacturing jobs, he will likely delay the tariffs amid ongoing trade talks with China.

On Wednesday, 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 viewed by Reuters warned that imposing tariffs on steel and aluminum and semiconductor components "may overlap with motorcycles, recreational vehicles, construction equipment, heavy-duty trucks, farming equipment, powersports vehicles, and others."

The Auto Industry Says Prices Will Increase if the Tariffs Are Imposed

Major automaker groups said last year the cumulative effect for the U.S. would be an $83 billion annual price increase and argued there was no evidence auto imports posed a national security risk.

The auto 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.

U.S. light-duty vehicle prices would increase by $2,750 on average, including U.S.-built vehicles using parts from Chinese suppliers, reducing annual U.S. sales by 1.3 million units and forcing many consumers to the used-car market, according to a think tank report released last year.

Gloria Bergquist, a spokeswoman for the Alliance of Automobile Manufacturers, a trade group representing GM, Volkswagen AG, Toyota Motor Corp and others, said automakers adamantly opposed new tariffs.

"At the end of the day, you can either have tariffs or investments, but you can't have both," she said to Reuters.

FutureCar Staff
FutureCar Staff
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