President Donald Trump wants his staff to push forward with plans to slap 25 percent tariffs on foreign cars before the midterm elections in a bid to score points with his political base, according to administration and auto industry officials.
The president believes a promise to tax cars, trucks and auto parts coming from U.S. competitors like Europe and Japan would allow him to present a concrete win to workers, the officials said.
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“Trump sees the auto tariffs as part of his midterm strategy, a way to position Republicans and the White House as pro-worker,” said one senior administration official. “He views it as part of the broader story about to helping to revitalize the American-based economy.”
Raising the price of foreign cars would be the latest in a series of aggressive trade moves by Trump, who is betting that his supporters will be more focused on the protection of local jobs than on the increased costs for consumers, or the potential loss of jobs in U.S. factories that make parts for foreign cars. It would come on top of new penalties he’s already imposed on steel and aluminum imports and his tough rhetoric about trade deficits with U.S. allies.
But before he can impose the penalties under U.S. law, Trump must first get the Commerce Department to declare vehicles like Toyotas and Audis a security threat. The agency has taken the first step by launching an investigation into whether the $228 billion worth of auto and auto part imports in 2017 pose a risk, perhaps by undermining economic well-being. And now, the sources said, Trump is pressing the agency to deliver the results before voters go to the polls in November.
The White House did not immediately respond to a request for comment.
A Commerce Department spokesman denied that the investigation, which can take up to 270 days under the law, is being expedited for political reasons. But three industry sources said there is an obvious push to have something on the president’s desk well before the November elections as he seeks leverage in his efforts to wrest concessions from trading partners.
“He wants first to add this to the mix to strengthen his leverage with Canada and Mexico on NAFTA, and it’s going to be useful for him to use against the EU vis-a-vis their auto tariffs or Japan to try to get them to the table on a bilateral [trade deal],” said one industry source. “He wants the leverage as soon as possible.”
Still, there are questions how the new tariff threat will actually help Republicans hold on to congressional seats.
“It doesn’t seem like a very successful midterm strategy to use the tariffs if Republicans in Congress are leading the fight against them,” said Lori Wallach, the director of Public Citizen’s Global Trade Watch. Wallach has largely been supportive of Trump’s trade policies as they relate to workers.
Trump’s tariffs on steel and aluminum, which were imposed under the same national security authority he wants to use for autos, have drawn strong rebukes from Republican lawmakers. Some have even mobilized to push legislation that would check his trade powers, although recent efforts to do that seem to be faltering.
Possible tariffs on autos and auto parts have also drawn mixed reaction from labor unions, a key constituency for Trump’s trade policies. The United Steelworkers, which represents workers in industries that supply auto manufacturers and auto parts-makers, has been the only major labor group to publicly support the investigation.
The United Automobile Workers, which has slightly more than 430,000 active members across the United States, still has not taken a position on the investigation.
“We’re looking at everything,” new UAW President Gary Jones told reporters at the group’s convention in Detroit on Thursday, just hours after being elected. “I haven’t studied it enough and been briefed on it enough to learn about.”
Automakers are equally conflicted. Domestic auto producers like Ford, GM and Chrysler, represented by their lobbying arm in Washington, the American Automotive Policy Council, took no position on the investigation. Foreign automakers with extensive production in the U.S. have been more strongly opposed to the action and warned that tariffs would “undermine the health and competitiveness of the U.S. auto industry.”
Politically, the action “may have the short-term impact they’re seeking, and long term be much more detrimental,” said Kristin Dziczek, vice president of industry, labor and economics at the Center for Automotive Research in Ann Arbor, Mich.
A tariff action could be “incredibly unpopular once it’s in place and it plays out for a while,” she said.
The U.S. auto industry, composed of both U.S.-based and foreign-based automakers, is already operating at about 80 percent capacity and produced around 11 million vehicles last year. That production filled about two-thirds of the U.S. auto market, which had total sales of about 17.3 million vehicles in 2017.
If the goal is to bolster U.S. manufacturers in the short term, “there’s not a lot of places that they can get more production out,” Dziczek said.
There’s also the question of time and resources.
One senior administration official cautioned that Commerce is overburdened by requests from Trump and may not issue the report as quickly as the president wants.
The division within the department that is handling the investigation, the Bureau of Industry and Security, is already stretched to the limit.
The department is still reeling from the aftermath of the similar investigation that resulted in tariffs on steel and aluminum. Staff there are in the midst of processing thousands of requests from companies asking for certain products to be excluded from those tariffs.
“I know that they are very burdened by their existing work,” said one former senior Commerce official.
Ross had promised the investigation into steel and aluminum would be completed in a little over two months after it was launched on April 20, 2017. However, the final investigation wasn’t completed until Jan. 11, 2018, and only after considerable scrutiny by the Defense Department and other agencies.
The deadline for public feedback on the auto investigation is coming up on June 22, and a public hearing will be held July 19-20.
“The report writers are already pretty frantically trying to find the data they need to support a case,” said Dziczek.
Doug Palmer and Andrew Restuccia contributed to this report.