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- President Donald Trump is considering an investigation that could end in tariffs on imported cars.
- The tariffs would be imposed through a Section 232 investigation, similar to the steel and aluminum tariffs imposed earlier this year.
- Earlier, Trump tweeted “big news coming soon for our great American Autoworkers.”
- Economists worry that increased trade protections, like tariffs, could spark trade wars and harm the US economy.
President Donald Trump is considering applying tariffs on imported cars, according to a new report.
The Wall Street Journal reported Wednesday that the Trump administration is considering a plan to impose the tariffs by undergoing an investigation through Section 232 of the Trade Expansion Act.
Section 232 allows the president to impose trade restrictionson national security grounds. It is the same method Trump usedearlier this year to slap a 25% tariff on imported steel and a 10% tariff on imported aluminum. Any tariffs would after a Commerce Department investigation.
Trump administration officials have begun to discuss thepossibility of auto tariffs with industry executives, according tothe Journal, and the tariffs could be as high as 25%. It is unclearif the new tariffs would focus on certain countries or all importedvehicles.
The Washington Post also reported that a Section 232 investigation could be a ploy to pressure Mexico into accepting new rules on auto imports in the renegotiation of the North American Free Trade Agreement, or NAFTA.
The US wants to increase the percentage of a car that must be made in one of the NAFTA countries – the US, Mexico, and Canada – in order for the vehicle not to be subject to a duty when it corsses into another member country. Mexico is resisting the change, creating a major impasse.
By threatening a tariff on all imported cars, Mexico could bepressured into the tightening of the rules.
In a tweet Wednesday, Trump teased “big news coming soon forour great American Autoworkers.”
“I think your autoworkers and your auto companies inthis country are going to be very happy with what’s going tohappen,” Trump told reporters when asked about the tweet later inthe day. “You’ll be seeing very soon what I’m talking about.”
The president previously threatened to levy new tariffs onEuropean cars if the European Union did not lower barriers onAmerican products.
“If the E.U. wants to further increase their already massivetariffs and barriers on U.S. companies doing business there, wewill simply apply a Tax on their Cars which freely pour into theU.S.,” Trump tweeted in March. “They make it impossible for ourcars (and more) to sell there. Big trade imbalance!”
Trade experts have warned that the use of Section 232 opensthe door to possible retaliation from other countries and violates international trade rules.
In addition, new tariffs would likely escalate Trump’s recenttrade battles. Economists say the president’s aggressive trade actions could trigger a global trade war, which in turn would cost the US jobs and possibly trigger a US recession.