10222018What's Hot:

Trump isolated in his push for tariffs on foreign cars

President Donald Trump’s threat to slap massive tariffs on imported cars and auto parts will rocket back into the spotlight this week with a high-stakes visit to the White House by European Commission President Jean-Claude Juncker, who is expected to bring with him some kind of concessions from the European Union designed to make it easier on Trump to declare victory and back off.

White House officials opposed to the auto tariffs have high hopes that Juncker’s visit could head off a bruising automotive trade war, which even some of Trump’s top advisers think could be potentially disastrous, raising car prices and destabilizing a thriving industry on the eve of the midterm elections.

Story Continued Below

“There is not a lot of support for the auto tariffs internally,” one senior administration official said. “There are many people who don’t want to see it go through.” This person said U.S. Trade Representative Robert Lighthizer, who generally supports the president’s aggressive trade policy, is among those skeptical of the auto tariffs. The official, who wasn’t authorized to speak publicly on the issue, declined to be identified by name.

The White House did not respond to a request for comment.

Two other senior administration officials, who also declined to be identified by name, described a similar dynamic on the auto tariff probe being conducted by the Commerce Department, with only Trump and hawkish senior trade adviser Peter Navarro supporting the idea of actually going through with the penalties.

Lighthizer, Treasury Secretary Steven Mnuchin and National Economic Council Director Larry Kudlow all generally oppose the auto tariff idea while holding out hope that Trump’s position is just a negotiating tactic that will eventually pay off, these people said.

“On the auto issue, it’s pretty lopsided inside the administration against doing this,” one of the two other senior administration officials close to the process said. “It’s pretty much just the president and Navarro who are in favor.”

Trump has repeatedly threatened to slap tariffs as high as 25 percent on all imported cars and auto parts in the next few months. The Commerce investigation could conclude within weeks with recommendations going to the president shortly after.

The auto industry, Republicans in Congress, U.S. trading partners and even some of Trump’s top advisers argue that the tariffs could be major political and economic negatives. Trump takes the opposite view, arguing that auto tariffs would be a political winner in Rust Belt states like Ohio and Michigan in the midterms.

Juncker visits the White House on Wednesday, and administration officials and European diplomats all have different ideas on what he might offer. Some inside the White House are hopeful that Juncker will agree to lift E.U. tariffs on American automobiles for two or three years in return for Trump dropping the investigation into whether auto imports into the U.S. present a national security threat.

Juncker may have other demands of his own, including a reduction in U.S. tariffs on European automobiles, especially a 25 percent levy on trucks.

For the moment, it remains unclear how much time Juncker — who is not technically a head of state — will get with the president. Some White House officials say the face time could be severely limited, especially since Trump tweeted angrily at the E.U. last week after it slapped a $ 5 billion fine on Google for allegedly abusing its dominant position in mobile.

“I told you so! The European Union just slapped a Five Billion Dollar fine on one of our great companies, Google. They truly have taken advantage of the U.S., but not for long!” Trump tweeted on Thursday.

Gerónimo Gutiérrez is pictured. | Getty Images

The first senior official who described opposition to the auto tariffs within the White House said Juncker’s face time with the president will depend on what kind of offer he brings with him. “He’ll get all the time he needs, but only if he has something interesting to say,” this person said.

Ahead of the Juncker visit, E.U. officials are preparing for the worst by assembling a list of American exports to slap with tariffs if the U.S. goes through with the auto levies.

German Chancellor Angela Merkel on Friday expressed guarded hope for Juncker’s visit.

“He will be making suggestions there about how we can enter into a discussion process to avoid this,” Merkel said at her annual summer news conference. Juncker will “present possibilities for discussion” to Trump, Merkel said. But she added a note of caution. “I’m not filling myself with expectations or predictions,” she said.

The Juncker visit will come after the administration endured blistering criticism of the proposed tariffs at a Commerce Department hearing last Thursday in which 44 of 45 witnesses, including representatives of major American car and auto parts manufacturers, argued against the levies, saying they would drive up car prices by thousands of dollars and cause the loss of potentially hundreds of thousands of jobs.

“By increasing the cost to manufacture a car, the tariffs will lead to higher vehicle prices for all automakers — foreign and domestic,” Matt Blunt, president of he American Automotive Policy Council, which represents Ford, GM and Fiat Chrysler, said at the hearing Thursday. “These higher costs will, in turn, lead to lower demand and lower U.S. auto sales and production. Ultimately, this will lead to fewer jobs in the auto industry.”

A new study from the Center for Automotive Research in Ann Arbor, Michigan, estimated import restrictions would increase new car prices by $ 455 to $ 6,875, depending on the approach Trump takes. Those higher prices would reduce consumer demand by 493,600 to 2 million vehicles per year, causing industry job losses ranging from 82,000 to nearly 750,000, CAR said. Those estimates do not include the impact of foreign retaliation, which could be significant.

Donald Trump is pictured. | AP Photo

Officials from Canada and the E.U. also threatened strong retaliation against U.S. exports if Trump goes through with the auto tariffs. “Import restrictions resulting from the present investigation could result in countermeasures on a significantly higher volume of U.S. exports, which we estimate at $ 294 billion, around a fifth of total U.S. exports in 2017,” European Union Ambassador David O’Sullivan said at the Commerce Department hearing.

Much of Trump’s fury is directed at the EU’s 9.8 percent tariff on passenger car imports, compared to the 2.5 percent duty charged by the United States. Last year, the United States exported $ 52 billion worth of cars to countries such as Canada, China and Germany. But it imported $ 176 billion, leading to a trade deficit in autos of around $ 124 billion. When parts and other vehicles such as buses and heavy-duty trucks are included, the entire automotive trade deficit was about $ 200 billion.

Germany, the biggest European auto producer, exported $ 20.5 billion worth of cars to the United States in 2017, and imported just $ 6 billion from the U.S. — a difference that Europeans attribute to consumer preferences at least as much as the tariffs.

The United States and the EU were expected to eliminate tariffs on each other’s autos as part of the proposed Transatlantic Trade and Investment Partnership. However, efforts to finish the deal before the end of the Obama administration failed, and there has been no work on the initiative since Trump took office in January 2017.

Meanwhile, the United States has a 25 percent tariff on light pickup trucks as a result of a trade dispute over chickens with the EU back in the 1960s. The duty, which has strong support from the United Automobile Workers union, has been phased out on imports from Canada and Mexico under NAFTA, but most other countries still face it.

In addition to senior officials inside the White House, Republicans and many Democrats on Capitol Hill are also highly skeptical of the proposed auto tariffs, believing they would cost U.S. jobs both from foreign automakers operating in the U.S. and domestic carmakers that rely on imported parts during the assembly process.

Sens. Doug Jones (D-Ala.) and Lamar Alexander (R-Tenn.) said recently they would introduce legislation to at least temporarily block Trump from unilaterally imposing automotive tariffs. Both of their states have large auto manufacturing plants.

“These tariffs are dangerous; these tariffs are going to cost us jobs; these tariffs are going to lower our family incomes. These tariffs are going to undo much of the good that the president and this Congress have done during the last year and a half to create this booming economy,” Alexander said last week.

Doug Palmer contributed to this report.

This article tagged under:

Missing out on the latest scoops? Sign up for POLITICO Playbook and get the latest news, every morning — in your inbox.

Source: Politics, Policy, Political News Top Stories

comments powered by HyperComments

More on the topic