89.1 WEMU

Trump Administration Considers Steep Tariffs Against Foreign Automakers

May 24, 2018
Originally published on May 24, 2018 8:06 pm
Copyright 2018 NPR. To see more, visit http://www.npr.org/.

ARI SHAPIRO, HOST:

President Trump has been playing high-stakes poker on trade so far without any major victories. And just as things seemed to be cooling off in a potential trade war with China, the president created shock waves yesterday. His commerce secretary, Wilbur Ross, caught governments and companies off guard by floating the prospect of steep tariffs on imported cars. NPR's Chris Arnold reports.

CHRIS ARNOLD, BYLINE: President Trump doesn't seem to mind creating unexpected chaos, and this new tariff idea certainly does that.

JEFFREY SCHOTT: I think the best word is reckless.

ARNOLD: Jeffrey Schott is a fellow with the Peterson Institute for International Economics.

SCHOTT: It creates a lot of uncertainty. This has implications far beyond just auto trade, even though auto trade is very significant.

ARNOLD: Schott says the move further strains relations with some of the U.S.'s closest military allies - Germany, Japan and South Korea. All are big car exporters. Japan's trade minister says such tariffs would create, quote, "disarray" in global markets and, quote, "it is very regrettable." OK, so why is the administration doing this? Commerce Secretary Wilbur Ross said on CNBC that the U.S. only charges a 2.5 percent tariff on foreign autos and auto parts. Well, many foreign countries charge much higher tariffs on cars.

(SOUNDBITE OF ARCHIVED RECORDING)

WILBUR ROSS: Europe - 10 percent. China had been 25 percent. Malaysia is way up in the double digits. The stupidity is that we let ourselves get into this box.

ARNOLD: Where he says it's not a fair deal for the U.S. auto industry. To be able to impose the tariffs legally, the administration will have to show that it's an issue of national security. Jeffrey Schott, who is also a former U.S. trade negotiator, says if the U.S. does that...

SCHOTT: There are many countries around the world who have in the past claimed that food security is a national security issue. And I think our major trading partners who buy a lot of our foodstuffs may retaliate against U.S. farmers.

ARNOLD: As you might imagine, car dealerships that sell Toyotas and BMWs and lots of other foreign cars, they are not very happy about this. And there are a lot of Americans who work at those dealerships.

CODY LUSK: We represent roughly 9,600 dealerships and close to 600,000 American employees.

ARNOLD: Cody Lusk is president of the American International Automobile Dealers Association. He says erecting steep tariffs reportedly as high as 25 percent on foreign cars would put those jobs at risk. And some of them, he says, are really good-paying jobs.

LUSK: Your old-school mechanic is now a technician who works on a computer on your car. And those are jobs that are very highly skilled and very in demand.

ARNOLD: Lusk says tariffs on auto parts could also raise the price of American-made cars. The president tweeted before the auto tariff announcement, quote, "there will be big news coming soon for our great American autoworkers." But the move today got a lukewarm response from the United Auto Workers union.

DENNIS WILLIAMS: I'm not going to say that I'm a hundred percent behind it because I don't know what all the details are.

ARNOLD: Dennis Williams is the president of the UAW. He says he appreciates it when the president does things aimed at helping American workers. But when it comes to tariffs, he said they can cut both ways - both help and hurt U.S. companies.

WILLIAMS: I'm often cautious about tariffs because we do do some exporting as well. So we've got to be careful that it's balanced.

ARNOLD: So the president may be looking to help autoworkers, but Williams acknowledged that the UAW hadn't been consulted about this move before it was announced by the White House. Chris Arnold, NPR News.

(SOUNDBITE OF GRUP SES' "GSBCB") Transcript provided by NPR, Copyright NPR.