The Trump administration has launched a national security investigation under Section 232 of the Trade Expansion Act of 1962 into car and truck imports that could lead to new US tariffs similar to those imposed on imported steel and aluminium in March.
That could lead to tariffs of up to 25 per cent on the same national security grounds used to impose US steel and aluminum duties.
Governments, lawmakers, automotive companies and industry groups from Asia to Europe to Canada and in the United States pushed back hard against the move, with many saying it would add to consumer costs and hurt jobs. The country’s largest automotive union gave muted support for the investigation.
“If this proposal is carried out, it would deal a staggering blow to the very industry it purports to protect and would threaten to ignite a global trade war,” US Chamber of Commerce President and Chief Executive Officer Thomas Donohue said in a statement. The influential lobbying group’s head urged the administration to reverse course.
In a statement, Commerce Secretary Wilbur Ross said: “There is evidence suggesting that, for decades, imports from abroad have eroded our domestic automotive industry,” and he promised there would be “a thorough, fair and transparent investigation.”
In particular, higher tariffs could hit Asian manufacturers including Toyota, Nissan, Honda and Hyundai. These companies regard the US as a key market, and the announcement of the investigation is reported to have sparked a selling of these companies’ shares across the region.
The governments of Japan, China and South Korea said they would monitor the situation, although China, which is increasingly eyeing the US as a potential market for its cars, added that it would defend its interests.
At a news briefing that focused largely on whether Beijing and Washington are making any progress in their growing trade dispute, Gao Feng, a spokesman at the Ministry of Commerce, said: “China opposes the abuse of national security clauses, which will seriously damage multilateral trade systems and disrupt normal international trade order.”
“We will closely monitor the situation under the US probe, fully evaluate the possible impact and resolutely defend our legitimate interests.”
The majority of vehicles sold in the US by Japanese and South Korean companies are produced there, but most firms also export to the US from plants in Asia, Mexico, Canada and other countries.
About one third of all US vehicle imports last year were from Asia.
In Tokyo, trade minister Hiroshige Seko said Japan, which accounts for about 40% of US vehicle imports, will continue to remind US officials that any trade measures must conform to the rules of the World Trade Organisation.
Japanese car makers did not issue individual comments but referred the matter to Washington-based Global Automakers, which includes Japanese companies among its members.
Its chief executive, John Bozzella, said the move would hurt American consumers.
“The US auto industry is thriving and growing. 13 – soon to be 14 – companies produced nearly 12 million cars and trucks in America last year. To our knowledge, no one is asking for this protection. This path leads inevitably to fewer choices and higher prices for cars and trucks in America.”