US President Donald Trump is unlikely to act immediately to slap tariffs on automotive imports even if his administration dubs them a threat to national security — and could wait weeks or months before taking action, according to lobbyists and analysts following the issue in Washington.
By Sunday night, the US commerce department is expected to transmit a long-awaited report to Mr Trump about its investigation of the national security risk posed by imported cars and car parts, a subject that has threatened to inflame trade tensions — most acutely with the EU and Japan, but also South Korea.
The report does not have to be publicly released, so its contents may not be immediately known. But car industry executives fear that it will include a recommendation for sweeping tariffs on imported vehicles and parts that could inflict serious damage on their businesses.
Mr Trump will have up to 90 days from when he receives the report to decide whether to take drastic measures. Trade lobbyists and analysts expect him to take some time with the decision, rather than moving rapidly to impose any levies.
“I would assume he would take most of the 90 days,” said Matt Blunt, the former governor of Missouri and president of the American Automotive Policy Council, which represents the big three US carmakers.
“We certainly think it would be very harmful to impose the tariffs. I am unaware of any organisation, company or entity that thinks broad-based tariffs on autos and parts would be helpful for the US economy or the US auto industry,” he said.
A move by Mr Trump to slap tariffs on foreign car and car parts would throw a big wrench into budding trade talks with the EU and Japan. It could also disrupt negotiations with China over a deal to defuse their trade tensions, which are reaching a critical stage.
Trump administration officials were preparing to move to impose car tariffs at the end of last year, but decided to hold off amid fears that it would be too disruptive at the time.
Last month, Inside US Trade, a specialised publication based in Washington, reported that the commerce department report would include three options for Mr Trump to choose from, including blanket tariffs of up to 25 per cent covering all auto imports, and more targeted tariffs covering electric vehicles and advanced technology parts.
However, Mr Trump has broad discretion and could respond with any measures he deems appropriate, even if does not fit one of those categories.
While Mr Trump is unlikely to move quickly to slap tariffs on foreign cars immediately, he is also unlikely to rule them out either, and will want to keep the threat alive in order to pressure the EU and Japan to make concessions in trade talks. With Brussels in particular, Mr Trump is hoping to persuade the EU to include agriculture in the talks, which they have refused so far.
“For Trump, this is all about leverage. This is all about art-of-the-deal and he’s going to utilise that to the maximum capacity that he can,” said one car industry lobbyist.
“He has 90 days to act, and my base case is he takes anywhere from 45 to 65 days to act,” said Chris Krueger, an analyst at Cowen Washington Research Group. “This is a means to an end — to get the Europeans and Japanese to open their agricultural markets — and there’s a pervasive view within the administration that the only way you got USMCA is because of steel and aluminium tariffs, and the only way you got Xi Jinping to negotiate is because of the tariffs on China.”
The US commerce department and White House declined to comment.
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