Trade

Trump Threatens to Blow Up The Auto Industry

JM Ashby
Written by JM 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.

  • muselet

    Donald Trump has been saying the same thing for months: if there’s no deal with the EU, then he will impose national security tariffs.

    What he said yesterday is just more of the same.

    Trump will absolutely impose tariffs, not because auto imports pose a national security risk—they don’t—but because he desperately wants to punish German carmakers for successfully selling their products in the US. The fact that Mercedes-Benz (Trump’s particular obsession) and BMW have large design, manufacturing and assembly operations in the US, employing thousands of US workers, doesn’t seem to matter. (Audis aren’t built in the US.)

    The damage Trump will do to the economy will be huge. How long it will take to pick up the pieces is an open question.

    –alopecia

    • Everything he touches turns to shite. Everything.

  • katanahamon

    My dad was a WW2 vet, big American car buyer, he would think nothing of fixing it to the point of ball joints, piston issues, etc. Usually Chevys. I learned to drive in his 77’ Olds, a car I and my friends called “The Gunboat,” one of its charming tendencies was to roll precipitously every turn. It was a huge two door…in fact, the doors were so poorly designed and heavy that as the car aged, the post that the door rested on began to be cut off as the door sagged. It got around 11.5 miles per gallon, and you had to add about half a quart of oil for each tank of gas. There was also something wrong with it well, all the time. I then inherited his purchase of another Olds, a Cutlass that my sis drove. It also had numerous problems. I vowed to never drive an American car ever again after seeing my oldest sis and her husband having great luck with Honda. After getting my first job, I bought a brand new Mazda Protege which ran fantastically for well, ever. I sold it to a friend after thirteen years for a dollar. Then, since I live in a snowy, mountain climate, I bought an 03 Subaru Forester, which is in my garage right now, still just under a hundred thousand miles on it. A truly fantastic car.

    Why the long comment? Well, American manufacturers simply never put the money into the quality of the cars they produced. How many brand new American cars do you see with flaking or rusted panels, a brake light out, or sitting by the side of the road? We’ve even bailed out the industry before..and why? Did they suddenly make giant strides in miles per gallon, or has that been relaxed? Sorry..you’ll never convince me American car companies even consider quality before profit.

    • David Greenberg

      If you are a car person as I am- Iam 76yo and have owned 120+ cars- and you like to read, The Reckoning by David Halberstam will confirm your feelings about American cars and will help you see in a fascinating, if exhaustive way, why it is so.

      • katanahamon

        I was a pro symphony player before disability struck..no money for extra cars..the two cars I bought so far are listed above, and I’m likely to make this last one my..last one..