Trade

Trump Threatens to Blow Up The Auto Industry

SK Ashby
Written by SK Ashby

The question of whether or not Trump will blow up the auto industry may have been answered yesterday afternoon.

For the first time since receiving the results of the Commerce Department's "national security" investigation of foreign cars and car parts, Trump said he would impose tariffs on foreign cars and parts.

From Bloomberg:

If we don’t make the deal we’ll do the tariffs,” Trump told reporters at the White House on Wednesday. “We’re trying to make a deal. They’re very tough to make a deal with, the EU.” [...]

On Monday the EU said that it will stick to its word not to impose new tariffs, as long as the U.S. does the same. The 28-nation bloc is readying retaliatory tariffs totaling 20 billion euros ($22.7 billion) of U.S. goods should Trump follow through on his threat to impose duties on EU cars and auto parts.

Trump says he will impose tariffs if they don't make a deal, but here's the thing -- they aren't making deal. Trump says they're "trying to," but they actually aren't. American and European trade officials have not initiated any negotiations or held a single meeting.

We still don't know exactly what the Commerce Department's report said, but given that Trump is making new threats to impose tariffs I think we can infer that the report gave Trump the green light for tariffs.

Trump has 90 days (86 now) to act on the Commerce Department's findings, so if Trump were going to impose tariffs on foreign cars and parts I think we can expect to see that happen on or before May the 18th.

Lobbying against tariffs on foreign cars will be very intense over the next two months because it threatens a significant portion of the entire economy, not just automakers. It threatens dealerships, suppliers, auto mechanics, and all the ancillary businesses associated with automobiles such as logistics companies like UPS or long-haul freight shipping. It's everything.