Automakers expect White House to delay decision on auto tariffs: sources

WASHINGTON (Reuters) – Automakers expect U.S. President Donald Trump to delay a decision due next week on whether to impose steep tariffs on imported cars and auto parts on national security grounds for up to six months as talks continue with the European Union and Japan.

FILE PHOTO: Imported automobiles are parked in a lot at the port of Newark New Jersey, U.S., February 19, 2019. REUTERS/Eduardo Munoz/File Photo

In February, the Commerce Department submitted its “Section 232” national security report. Trump has until May 18 to act, but four auto executives who have spoken to administration officials say he is likely to extend that deadline by another 180 days. He may also announce a specific date to impose new duties if no deal is reached.

Administration officials say Trump could still opt to impose the tariffs by May 18, but believe that after a series of investment announcements by automakers – including one by General Motors Co on Wednesday of $700 million in three Ohio plants – he will likely delay the tariffs amid a trade battle with China.

The auto tariffs face wide opposition in Congress. The White House refuses to turn over the Commerce report to Republican Senator Chuck Grassley, chairman of the Senate Finance Committee, who has been demanding to see it.

On Wednesday, 159 House of Representatives members led by Ways and Means Committee Vice Chair Terri Sewell wrote White House National Economic Council Director Larry Kudlow to urge him to advise Trump against “imposing trade restrictions that could harm the auto sector and the American economy.”

The letter from 79 Democrats and 81 Republicans seen by Reuters warned that imposing tariffs on parts in cars “may overlap with motorcycles, recreational vehicles, construction equipment, heavy-duty trucks, farming equipment, powersports vehicles, and others.”

The White House did not immediately comment.

Administration officials have said tariff threats on autos are a way to win concessions from Japan and the EU. Last year, Trump agreed not to impose tariffs as long as talks with the two trading partners were proceeding in a productive manner.

The industry says tariffs of up to 25 percent on millions of imported cars and parts would add thousands of dollars to vehicle costs and potentially lead to hundreds of thousands of job losses throughout the U.S. economy.

Gloria Bergquist, a spokeswoman for the Alliance of Automobile Manufacturers, a trade group representing GM, Volkswagen AG, Toyota Motor Corp and others, said automakers adamantly opposed new tariffs.

“At the end of the day, you can either have tariffs or investments, but you can’t have both,” she said.

The Commerce Department started its investigation in May 2018 at Trump’s request to determine the effects of imports on national security.

U.S. light-duty vehicle prices would increase by $2,750 on average, including U.S.-built vehicles, reducing annual U.S. sales by 1.3 million units and forcing many consumers to the used-car market, according to a think tank report released last year.

Major automaker groups said last year the cumulative effect for the United States would be an $83 billion annual price increase and argued there was no evidence auto imports posed a national security risk.

Reporting by David Shepardson; Editing by Peter Cooney