WASHINGTON – After commencing a trade war with China and upset American Allies with steel customs, President Donald Trump is founded for his next fight. He is focused on a product that underlies the American experience: cars.
Trump's latest plan is to consider killing tariffs on imported cars and car parts – a move that he says would help US workers but could increase car prices, make US manufacturers less competitive and retaliation from other nations.
The action has also begun provoking a backlash among members of Congress, which has hitherto been reluctant to challenge Trump policies that rise for decades of US politics.
On Thursday, manufacturers, suppliers, car dealers and foreign diplomats will figure out to testify at a Washington hearing to try to lead auto tariffs. Following the hearing, the Ministry of Commerce will decide to label imported vehicles and car parts threaten America's national security and to recommend tariffs to the president.
When he announced his announcement in May, Trade Minister Wilbur Ross said, "There is evidence that for several decades imports from abroad have damaged our domestic automotive industry."
But General Motors, who obviously would benefit from a tax on his foreign competition, is opposed to Trump's plan.
And even in view of the trade war of the administration with China over Beijing's predators in high-tech industries and even after importing steel and aluminum imports from America's closest allies, Trump's car tariffs increase significantly: the United States last year imported 1
"This really takes up a giant hack," said Mary Lovely, an economist for the Syracuse University studying trade. "I think it can be a bridge too far."
In the Senate, Democrats Doug Jones of Alabama and Republican Lamar Alexander of Tennessee have announced plans to introduce legislation that opposes Trump's proposal for 25 percent car tariffs. Both warned that taxis threaten tens of thousands of jobs in their states.
"Foreign cars and car parts do not pose a threat to our national security," Jones said. "But you know what's a threat. A 25 percent tax on the price of these imported goods."
Nor does the US automotive industry cry for help against foreign competition. US car sales reached 17.2 million last year – the fourth best increase in record. Since the end of the big recession in 2009, US car manufacturers and subcontractors have increased 343,000 jobs.
Despite the threat of Trumps, the car trade war can not happen at any time, if at all. The president may be hanging out to use the tariffs to push the European Union to lower its own car tariffs or to Mexico to agree on a re-enactment of the North American Free Trade Agreement, which is more favorable to the United States.
"I hope it's just bluster," says Paul Ritchie, Honda's owner and Kia retailers in Maryland and Pennsylvania. "I understand where the administration comes from. Our trade balances should be corrected. I'm not sure you can take 25-30 years of trade balance imbalances and try to fix it in six months. "
Although auto tariffs are not just a bargaining deal, it may take time before they kick in. It took 10 months for steel and aluminum tariffs – even justified for national security reasons – to go from proposal to reality.
In the direction of steel, aluminum and perhaps cars, the administration has argued an imprecise provision of trade policy: the Trade Enforcement Act of 1962 gives a president the opportunity to introduce unlimited fees on special imports if the Department of Commerce finds that these imports threaten national security.
Administration has defined national security to a large extent, suggesting that anything that hurts the US's economic competitiveness hurts national security – "one argument you can apply for any industry you want, "noted Philip Levy, senior fe llow at Chic ago Council on Global Affairs and a former White House consultant.
Automobile manufacturers have said that taxes would raise their costs – and their customers. "In comments submitted by the government, GM warned that" increased import duties could lead to a smaller GM, a reduced presence at home and abroad for this iconic American company and risk less-no more-american jobs. "
Also, companies that build cars in America are dependent on imported parts that would be subject to the tariffs, thus increasing the cost of car manufacturers.
" There is no automaker who has 100 percent exclusive US products, "says Brian Krinock, Toyota's senior vice president of North American factories." It's a global company with global business. "
Toyota manufactures nine models in the United States, all of which use some imported parts. About 30 percent of Camry's shares are imported, says Krinock, and a 25 percent fee on these parts would raise the cost of a Camry with $ 1800.
Toyota Sienna, manufactured in Princeton, Indiana, would be nearly $ 3,000 more expensive, he said and the Tundra pickup truck manufactured in San Antonio, Texas, would cost $ 2 800.
Car collector has also written to Commerce to express its resistance to the tariffs.
"I've been a lifelong car enthusiast and old cars do not pose any threat to national security, neither do they share their parts," Mark Gillett wrote in Dallas, urging commerce to release cars and share "of a certain age".
Adam Posen, Peter's President Institute for International Economics, estimated that tariffs would increase car prices by 9 percent to as high as 21 percent for luxury models. They would reduce industry output 1.5 percent and cost 195,000 jobs, a Peterson analysis found.
Then there is the threat of retaliation from American trading partners. Toyota exports eight US models to 31 countries; Exports could be subject to replacement fees, says Krinock.
Nearly 98 percent of the cars and lorries that would suffer from tariffs are imported from US allies: the European Union, Canada, Japan, Mexico and South Korea. If all these countries are retaliated by releasing 25 percent of their US bile exports, it would deepen the impact on the US economy and cost up to 1.2 million jobs in the United States, Posen estimated.
The Department of Commerce initially launched two days of hearings about the proposed car tariffs, but cut it to one day. The post said it's time for industry representatives to testify that the administration is already expecting to introduce tariffs.
"This is something where they decided the outcome," he said.