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Trudeau to Trump: Auto tariffs would hit U.S. just as hard

26 May 2018

Washington reignited fears of a bitter transatlantic trade war on Wednesday after it announced that it has launched a national security investigation into vehicle and truck imports that could lead to similar United States tariffs to the ones imposed on imported steel and aluminium in March.

Trump ordered the investigation under Section 232 of the Trade Expansion Act of 1962, which allows the president to restrict imports that threaten USA national security, including levying tariffs on foreign goods which excessively displace domestic goods or cause substantial unemployment.

Trump said in a statement Wednesday that the domestic auto industry is "critical to our strength as a nation". Any new inquiry would also rely on the so-called Section 232 of the Trade Expansion Act of 1962, a, gives the executive branch the ability to conduct investigations to "determine the effects on the national security of imports".

"There is evidence suggesting that, for decades, imports from overseas have eroded our domestic auto industry", said Ross in a statement.

Last year, 13 domestic and worldwide automakers made almost 12 million vehicles in the United States, it said, and " the sector remains the leading exporter of manufactured goods in our country".

Passenger cars make up around 30 percent of Japan's total exports to the United States and Tokyo has already threatened Washington with retaliation at the World Trade Organization for the steel tariffs.

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Beijing has threatened equal retaliation, including tariffs on some of its largest USA imports, including aircraft, soybeans and autos. America's capacity to churn out cars hasn't been "a meaningful driver of national security" for the USA since World War II, Clayton Allen Height Capital Markets analyst said in a client note.

"We will closely watch developments of the United States investigation, conduct a comprehensive assessment on its potential impact and resolutely safeguard our own legitimate interests", Chinese Commerce Ministry spokesman Gao Feng said at a weekly news briefing Thursday.

"From Canada's side, higher tariffs mean higher prices and also less demand", she said.

Trump appeared to hint at Wednesday's announcement with earlier tweets, saying: "There will be big news coming soon for our great American autoworkers".

American vehicle manufacturers, General Motors and Fiat Chrysler, import between a quarter and half of their cars sold in the USA from plants in Mexico and Canada.

"As a global manufacturer, Geely Holding Group is in favor of free trade and open markets".

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U.S. President Donald Trump says Canada and Mexico are "spoiled" and hard to deal with in NAFTA negotiations.

Currently, the United States charges just 2.5% on auto imports, which is lower than the European Union's 10% and China's 25% - although the latter country will lower its tariff to 15% from 1 July. "After many decades of losing your jobs to other countries, you have waited long enough!", he tweeted.

Trump, who has pledged to revive American manufacturing, has launched a series of trade actions, demanding China import more American goods, starting talks to renegotiate NAFTA and imposing tariffs on steel and aluminum imports.

U.S. Senate Finance Committee Chairman Orrin Hatch said possible auto tariffs are "deeply misguided", and urged the administration "to remain focused on addressing China's trade practices". He has complained about the difficulties US carmakers face selling their products overseas, raising the subject with Asian and European allies.

Renault SA, exposed to the USA market via its 43.4 percent stake in Nissan, fell as much as 2.1 percent. The E.U. adds 10 percent to the cost of imported American models, while the United States imposes a levy of 2.5 percent on most imported cars and 25 percent on most pickups.

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Trudeau to Trump: Auto tariffs would hit U.S. just as hard