US President Donald Trump. Picture: REUTERS
US President Donald Trump. Picture: REUTERS

Washington — US 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 have 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 US commerce department to protect the US automotive industry from imports on national security grounds, the officials said.

A White House spokesperson declined to comment. The officials 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 car makers expected Trump to delay the decision as trade negotiations get underway with the EU and Japan. General Motors (GM), Volkswagen (VW), Toyota Motor and others have warned of the damaging impacts of imposing tariffs of up to 25% 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 car makers they plan 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 US national security by weakening American car makers’ 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 $700m 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 said last week. At the same time, Trump has escalated his trade war with China, sharply increasing tariffs on $200bn worth of Chinese goods and launching public consultations on remaining Chinese imports of about $300bn.

The automotive tariffs face wide opposition in US Congress. The White House has refused to turn over the commerce department report to Republican Senator Chuck Grassley, chair of the Senate finance committee, who has been demanding to see it.

Job losses

Last week, 159 House of Representatives members led by ways and means committee vice-chair Terri Sewell wrote to White House national economic council director Larry Kudlow to urge him to advise Trump against “imposing trade restrictions that could harm the automotive sector and the American economy”.

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

Administration officials have said tariff threats on vehicles 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% 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 US 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 automotive tariffs.”

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

Reuters