Trade

Will Trump Blow Up the Auto Industry?

JM Ashby
Written by JM Ashby

We don't know exactly what the Commerce Department's new report says because the contents haven't been disclosed, but the department has concluded its 'national security investigation' of foreign cars and car parts.

Now that Trump has the department's report in his hands, he has 90 days to decide whether or not to blow up the auto industry a second time.

From Bloomberg:

Commerce Secretary Wilbur Ross has submitted his recommendations to Trump, the department said in a statement on Sunday in Washington, without offering any insights into the findings. Trump has 90 days to decide whether to act on the findings. [...]

Trump has 90 days after officially receiving the report to decide whether to act should the department conclude that auto imports are a security threat.

Commerce could recommend a variety of options to restrict imports, including implementing tariffs and quotas. The president then has 15 days to act after announcing he will move forward with measures.

Based on the results of the department's previous investigations that resulted in tariffs on foreign solar panels, foreign metal, and virtually everything imported from China, we can reasonably assume that Wilbur Ross has given Trump the green light to impose tariffs on cars and parts.

Whether or not Trump actually goes through with it almost certainly depends on political conditions, not economic or "national security" conditions. No one actually believes foreign solar panels or aluminum are a threat to national security but that's not the real reason Trump imposed tariffs on them.

Suffice to say, tariffs on foreign cars and parts would be a disaster for more than one industry.

Tariffs on foreign cars and parts would disrupt supply chains, kill jobs at factories, send dealerships into chaos, and even result in another wave of bankruptcies on American farms. European Commission President Jean Claude Juncker has already stated that imposing tariffs on foreign cars would result in retaliatory tariffs on American energy and agriculture.

BRUSSELS (Reuters) - United States tariffs on imports of European cars could mean that Europe would buy less soya beans and liquid gas from the U.S., the head of the European Commission Jean-Claude Juncker said on Monday. [...]

“Trump has given me his word that there will be no car tariffs for the time being. I believe him. However, should he renege on that commitment, we will no longer feel bound by our commitments to buy more US soya and liquid gas. However, I would very much regret that,” Juncker told the paper.

There is a non-zero chance that Trump could increase his tariffs on China and impose tariffs on foreign cars and parts within a relatively small window of time.

I consider that somewhat unlikely, but it's possible. All Trump has to do is get angry and it could happen.

  • stacib23

    As a country, we are gonna catch all kinds of hell convincing the rest of the world to ever trust us again. Sheesh, this is depressing.

    • Christopher Foxx

      Step one to regaining trust would be showing we’ve gotten rid of the cause of the problem.

  • katanahamon

    Rump is the national security threat.

  • muselet

    Auto imports are not a national security threat.

    Donald Trump admitted as much when he reportedly told Emmanuel Macron he wanted to ban sales of German cars “until no Mercedes models rolled on Fifth Avenue in New York” (if you read German, the original article is in the German weekly business magazine WirtschaftsWoche). His argument is and always has been that Germany doesn’t allow US cars to be sold there (untrue: the EU type approval process does not take into account the origin of a car; also, US cars aren’t generally well-suited to German driving conditions), so he wants a tit-for-tat retaliation.

    Nevertheless, Wilbur Ross almost certainly approved tariffs because Trump wants to impose tariffs and Ross doesn’t want to be fired.

    Hold onto your hats.

    –alopecia