Daily Management Review

Auto Firms Unhappy At Trump’s Suggestions Some Firms A Threat To US National Security


US President Donald Trump on Friday declared that some imported vehicles and parts pose a national security threat but delayed a decision for as long as six months on whether to impose tariffs to allow for more time for trade talks with the European Union and Japan. 
The identification of some foreign cars and car parts posing threat to the national security of the United States as declared by the President Donald Trump earlier this week has created discontent among automakers, dealers and foreign governments of some of the traditional and conventional allies of the US. This has been increased by White House document that would ask for voluntary export quotas from the trading partners of the country.
The designation was described as “a major set-back for American consumers, workers and the auto industry” and said it sent the message “our investments are not welcomed” by Toyota Motor Corp, Japan’s major car exporter and one of the largest exporter of foreign cars into the US. The company had made the announcement in March this year of investing $13 billion in the US till 2021.
“We completely reject the notion that our car exports are a national security threat. The EU is prepared to negotiate a limited trade agreement (including) cars, but not WTO-illegal managed trade,” European Trade Commissioner Cecilia Malmstroem said on Twitter.
Voluntary export restraints are barred under the World Trade Organization rules and the EU has repeatedly stated that any quotas on auto exports are not an agreeable proposition.
The decision of the Trump administration to postponement the imposition of import tariffs on foreign cars and car parts on the pretext of threat to national security by six months has for now helped to avert a major escalation of the strategy of traded war across the world – especially with some of its traditional partners in addition to the one ongoing with China.
Trump’s rhetoric of criticizing the foreign imports from the EU continued on Friday. “They have trade barriers. They don’t want our farm products, they don’t want our cars. They send Mercedes-Benz’s in here like they’re cookies,” he told a group of real estate agents.
“They send BMWs here. We hardly tax them at all.”
Before the postponement of the auto tariff, Saturday was the deadline for Trump to take a final decision on recommendations by the Commerce Department for imposing tariffs of up to 25 per cent on foreign cars to protect the US auto industry on national security grounds.
Negotiations on trade deals with the EU, Japan and any other country that is perceived to be appropriate was asked to be carried on by US Trade Representative Robert Lighthizer by a direction from Trump. A report on eth development on those talks is to be presented to the president in 180 days. In case the talks yield no results, Trump will decide by then “whether and what further action needs to be taken.”
There have earlier been warnings issued by the automotive industry that warned of dramatic reduction in industry spending on self-driving cars, raise car prices dramatically and cost hundreds of thousands of jobs in the auto sector.
Even the suggestion some auto imports are a national security risk is “absurd”, said a group representing major German and Asian automakers including Daimler AG, Volkswagen AG, Honda Motor Co and Nissan Motor Co. “No one in the industry has asked for tariffs or other ‘protection’ from the government,” the group added.
“The truth stands: imported autos and auto parts are simply not a national security threat,” said Cody Lusk, president of the American International Automobile Dealers Association.“Using this spurious claim as justification to force our trading partners into new negotiations will only create more uncertainty for America’s entire auto industry.”
The auto firms are “deeply concerned that the administration continues to consider imposing auto tariffs,” said the Alliance of Automobile Manufacturers which is a trade group that has General Motors Co, VW, Ford Motor Co and others in it.