U.S. May Seek to Install Compliance Staff at ZTE, Ross Says

Sergio Conner
May 26, 2018

Sure, investors in major Japanese and South Korean auto makers were rattled Thursday: The likes of Toyota and Hyundai tumbled around 3% after the Commerce Department said overnight it is considering the new tariffs on national-security concerns.

President Donald Trump's unexpected announcement that the United States would consider tariffs on imports of foreign vehicles has raised red flags among trade experts and prompted new fears of a trade war with some of America's closest allies.

The president says in a statement that "core industries such as automobiles and automotive parts are critical to our strength as a Nation".

Late last week, Japan's automakers' association urged its export partners to keep tariffs on vehicles and components low and maintain free trade relationships.

In Beijing, Commerce Ministry spokesman Gao Feng told reporters that abusing national security provisions would "undermine the multilateral trade system and disrupt the order of global trade".

"Contrary to the assumption underlying the investigation on import vehicles, the USA auto industry is thriving", Bozella said.

News of the probe was met with criticism from industry groups that represent both manufacturers and auto dealers, which said that any new tariffs would hurt consumers because cars would be more expensive and supply would be reduced. The initiation of the trade investigation could be seen as an attempt to gain leverage in the talks with the two USA neighbours.

Trump said he would direct the Commerce Department to look into imposing trade restrictions imports of cars, trucks, and other vehicles. Trade experts have warned that if the requirements are too onerous, auto and auto parts makers will opt out of NAFTA and pay the existing 2.5 per cent tariff on imported vehicles - a move that would be less attractive if the tariff was dramatically increased.

"That is a point that we are making very clearly to our USA partners and allies", she said.

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"If we do decide to go forward with an alternative, what it literally would involve would be implanting people of our choosing into the company to constitute a compliance unit", Ross said in an interview on CNBC on Thursday.

Trump hinted at the auto action early Wednesday when he tweeted, "There will be big news coming soon for our great American Autoworkers".

Roughly 12 million cars and trucks were produced in the United States past year, while the country imported 8.3 million vehicles worth $192 billion.

The United States imported 8.3m vehicles in 2017, worth $192bn, including 2.4m from Mexico, 1.8m from Canada, 1.7m from Japan, 930,000 from South Korea and 500,000 from Germany, according to U.S. government statistics. "He is clearly abusing this national security law simply to get his tariff fix".

Last year, the United States imported $43B worth of cars from Canada, $39B from Japan, $30B from Mexico, $21B from Germany, $16B from South Korea. "After many decades of losing your jobs to other countries, you have waited long enough!" he tweeted in the morning. As we have previously argued, trade deficits in an economy led by demand, such as in the United States, are simply the result of an economic system during years of expansion.

Momentum in Congress is growing to check a USA withdrawal from the North American Free Trade Agreement (NAFTA), and earlier this month a bipartisan group of members of the House of Representatives introduced the Trade Authority Protection Act, which would allow further congressional review of trade moves by the White House.

"China and Germany are on the path of promoting multilateralism and bolstering free trade", Merkel said in Beijing.

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".

According to government statistics, in 2017 the USA imported 8.3 million vehicles worth $192bn (£144bn), and exported nearly 2 million vehicles worth $57bn (£43bn).

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