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Trump could slap steep tariffs on imported cars next week

Business Insider logo Business Insider 11/8/2019 Gina Heeb

Weeks after General Motors ended one of its longest strikes in years, the American car industry could be headed for more turbulence.

After an initial six-month delay, President Donald Trump must decide by Nov. 13 whether to follow through with threats to levy tariffs on automobile imports. The U.S. Commerce Department drew backlash from business groups and lawmakers in February after it concluded that car imports pose a threat to national security.

While Trump has continued to threaten the move against Asian and European trading partners, Commerce Secretary Wilbur Ross said over the weekend that the tariffs might not be necessary.

"We have had very good conversations with our European friends, with our Japanese friends, with our Korean friends, and those are the major auto-producing sectors," Ross said in an interview with Bloomberg.

The Center for Automotive Research estimated in a report last year that the proposed 25% tariffs would add up to $6,875 to imported vehicle prices. Average car prices overall would increase $4,400, the group said. Economic research groups have reached similar estimates.

"The uncertainty created by the current and potential tariffs on autos and auto parts may also reduce investment," the nonpartisan Congressional Research Service said in June. "Ultimately, the tariffs could increase the price of motor vehicles sold in the United States, prompting some consumers to delay purchases or purchase used cars instead of new vehicles, and generating inflationary pressures."

The Commerce Department did not immediately make its findings regarding car imports and national security available to lawmakers, who have expressed widespread opposition the prospect of auto tariffs. Nearly 160 bipartisan members of Congress warned against car tariffs in a May letter to White House economic adviser Larry Kudlow.

"We are convinced that the products hard-working Americans in the auto sector design, build, sell, and service are not a threat to our national security," the letter said. "We strongly urge you to advise the President against imposing trade restrictions that could harm the auto sector and the American economy."


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