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Trump Trade War – Mr Trump delays Section 232 tariffs on automobiles

Auto News - Published on Mon, 20 May 2019

Image Source: Al Jazeera
Following an extensive review of the Department of Commerce's Section 232 automobile report, Mr Trump issued a proclamation directing the United States Trade Representative to negotiate agreements to address the national security threat, which is causing harm to the American automobile industry. The Department of Commerce report, delivered to the President on February 17, 2019, concluded that imports of automobiles and certain automobile parts threaten to impair the national security of the United States. United States defense and military superiority depend on the competitiveness of US automobile industry and the research and development that industry generates. The negotiation process will be led by United States Trade Representative Robert Lighthizer and, if agreements are not reached within 180 days, the President will determine whether and what further action needs to be taken.

These actions follow an investigation by the Department of Commerce, which identified significant foreign threats to the American-owned automobile industry. American-owned producers’ share of the global automobile market fell from 36% in 1995 to just 12% in 2017. Further, American-made automobiles now account for only 22% of automobiles sold in the United States. Production of American-made autos has been declining for years, while foreign-made imports have flooded the United States market. In 2017 alone, the United States imported over USD 191 billion worth of automobiles. Unfair trade barriers, like those in the European Union, Japan, and other countries, further exacerbate the effects of imports on American automobile producers. Excessive imports have weakened American producers’ ability to invest in research and develop new technologies.

The Alliance of Automobile Manufacturers, an association of 12 of the largest car manufacturers in US, said “The case remains clear – cars are not a national security threat. We are deeply concerned that the administration continues to consider imposing auto tariffs. By boosting car prices across the board and driving up car repair and maintenance costs, tariffs are essentially a massive tax on consumers. The higher prices would lower consumer demand and could lead to the loss of as many as 700,000 American jobs. The tariffs would also roll back the benefits from the Trump tax cut and have widespread impact across manufacturers, suppliers, and dealers in all 50 states. Since 2017, domestic and international automakers are investing USD 22.8 billion in new and existing facilities in the United States –largely spurred by this administration’s pro-growth policies. However, increased auto tariffs threaten to undo this economic progress. At the end of the day, you can have tariffs or investment, but you can’t have both.”

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Posted By : Rabi Wangkhem on Mon, 20 May 2019
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