Daily Management Review

China Trade War Force Trump Administration To Reassess Auto Tariffs Imposition


China Trade War Force Trump Administration To Reassess Auto Tariffs Imposition
The US government has postponed an impending decision on the whether or not to impose additional tariffs on foreign made cars and car parts by a period of six months. According to reports, the decision was to be taken this Friday. Sources quoted in the media said that the move to postpone the decision was taken because it would have hurt Europe and Japan – the two largest foreign car makers in the US which could have jeopardized the trade talks that the US is currently conducting with these two parties.
This move also shows that the Trump administration is making a reassessment of the situation and the strategy of imposing tariffs that would hit its natural and traditional allies as the country now is completely focused on winning its trade war with China.
In a separate announcement, the US Treasury Secretary Steven Mnuchin said that a country was also close to striking an agreement for rolling back steel and aluminum tariffs on Mexico and Canada. If the tariffs are lifted it would certainly ease the process of passing the newly rehashed new North American Free Trade Agreement into law which includes both Mexico and Canada apart from the US itself.
“I think we’re close to an understanding with Mexico and Canada,” Mnuchin said at a Senate hearing on Wednesday. He however refrained from committing that the tariffs would be indeed lifted. “I can assure you it is a priority of ours,” he said instead.
Mnuchin was also very cautious about answering questions on the prospect of  a trade deal with China. “I’m hopeful,” he said. “I wouldn’t say I’m confident.”
Some analysts believe that the Trump administration is slowly realizing the challenges of fighting trade wars on multiple fronts which is reflected in the consideration of lifting of the tariffs. There is increased pressure on the White House from lawmakers and businesses to focus on finding a solution to address the so called imperfect trade practices of China while lifting the far more unpopular tariffs that the Trump administration had imposed on allies like Europe, Canada and Mexico.
The relations between the US with European Union and Japan have been on a knife edge because of the specter of auto tariffs. Under their own trade agreement, Canada and Mexico have managed to negotiate a quote for themselves with the US which would not fall under the purview of auto tariffs if any.
The initial decision of the Trump administration to even contemplate imposing of auto tariffs had been met with fierce opposition among industry leaders and in Congress. Additionally, preliminary trade talks with the EU and Japan are currently being held by the White House. According to critics, those talks would be thrown down the gutter if the US imposes auto tariffs.  
“Pleased that @POTUS has delayed decision on auto tariffs,” Senator Rob Portman, Republican of Ohio, tweeted Wednesday in response to media reports that the levies would not be imposed.