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Would Trump's proposed tariffs on imported autos work?

23 0 0
25.05.2018

Do Subaru Foresters, BMW 3-series sedans and Toyota Priuses pose a threat to U.S. national security?

President Donald Trump suspects they might. He's ordered the Commerce Department to investigate whether the peril is dire enough to justify tariffs or quotas on imports of foreign-made vehicles and auto parts to the United States.

The announcement sent shares of Japanese and European automakers tumbling in global stock markets Thursday. It also aggravated trade tensions between the Unites States and allies like Germany and Japan. And most economists and trade analysts ridiculed any notion that national security might be imperiled by the flow of vehicles imported to the United States.

"It's utter foolishness," said Philip Levy, senior fellow at the Chicago Council on Global Affairs and a former White House trade adviser. "It is not my understanding that we drive Ford Escorts into battle."

WHAT DID THE PRESIDENT DO?

Trump ordered Commerce Secretary Wilbur Ross to investigate whether imported cars, trucks and auto parts threaten U.S. national security. If Commerce finds that they do, it can recommend trade sanctions, including tariffs and quotas. This investigation could take months.

A person familiar with the discussions said the president has suggested seeking new tariffs of 20 to 25 percent on auto imports. The person spoke on condition of anonymity and was not authorized to speak about private deliberations.

The Trump administration is turning to a little-used weapon in trade policy: Section 232 of the Trade Expansion Act of 1962. It empowers the president to restrict imports and impose unlimited tariffs if Commerce finds they threaten national security.

HAS THE U.S. DONE THIS BEFORE?

In March, after an earlier Commerce investigation, the Trump administration dusted off Section 232 authority to slap tariffs on imported steel and aluminum.

Until then, the United States had pursued only two such inquiries since joining the Geneva-based World Trade Organization in 1995. Both times — in a 1999 case involving oil imports and a 2001 case involving iron ore........

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