Published: Sat, May 26, 2018
Global Media | By Garry Long

Trump says Canada, Mexico 'very hard to deal with' in NAFTA talks

Trump says Canada, Mexico 'very hard to deal with' in NAFTA talks

Donald Trump could impose a drastic increase in tariffs for cars imported to the U.S. in a bid to increase the competitiveness of the country's automotive industry.

Commerce Secretary Wilbur Ross said late Wednesday that following a conversation with Trump, he is launching an investigation into whether automobile imports are hurting U.S. national security.

"Core industries such as automobiles and automotive parts are critical to our strength as a nation", Trump's statement said.

An investigation has been launched into the national threat posed by these imports, the first step toward imposing the tariffs.

"Import duties on cars would be a nightmare for the German auto industry and would lead to a massive sales impact", said Thomas Altmann at Frankfurt-based asset manager QC Partners.

The Trump administration's threat to slap heavy tariffs on imported cars to protect us national security has sparked an outcry not only, as might be expected, from the auto industry, but also from members of his own party.

Governments, lawmakers, auto companies and industry groups from Asia to Europe to Canada and in the United States pushed back hard against the move, with many saying it would add to consumer costs and hurt jobs. The initiation of the trade investigation could be seen as an attempt to gain leverage in the talks with the two USA neighbours. Obama makes case for tighter regs on tech Trudeau on possible auto tariffs: Trump shows flimsy logic Senate GOP sounds alarm over Trump's floated auto tariffs MORE touted the benefits of the steel and aluminum tariffs on Thursday, arguing that new auto tariffs could boost USA industries similarly. It made no mention of the possible measures that could follow, but The Wall Street Journal reported that Trump was seeking tariffs of as much as 25% on auto imports.

"Evidence of significant economic damage due to the trade conflict is mounting", tweeted economist Marcel Fratzscher of the DIW think-tank in Berlin.

The latest announcement comes as negotiations with Canada and Mexico over revamping the continent-wide North American Free Trade Agreement have stalled over auto demands. "Thirteen, soon to be 14 companies, produced almost 12 million cars and trucks in America past year", he said in a statement quoted by Politico.

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Still, the action won praise from auto workers, a key constituency in the battleground states of MI and OH which Trump carried in 2016. President Donald Trump predicted earlier that USA automakers and auto workers would be "very happy" with the outcome of the NAFTA talks.

Although a large portion of the US's most popular vehicle models, including those from foreign brands (such as the upcoming BMW X7), are already manufactured within its borders, many are imported from other countries. Neither has a presence in the USA, though PSA has plans for a return to the American market.

The move is already drawing opposition from parts of the American auto industry.

The tariffs could be devastating, but it's doubtful the US will go through with them because the resulting higher costs would give competitors in Europe and elsewhere a competitive advantage, said Sui Sui, an associate professor at Ryerson University's Ted Rogers School of Management.

"So that was a very good activity [steel and aluminum tariffs] for us and we are looking forward to researching whether cars should be handled in a similar fashion", Ross said on CNBC's "Squawk Box".

According to the DIHK, autos and parts accounted for almost 29 billion euros ($34 billion) of Germany's 111.5 billion euros in exports to the United States previous year.

Speaking with reporters Wednesday, Trump levelled the same accusations against Mexico, in regards to the ongoing NAFTA negotiations.

"You'll be seeing very soon what I'm talking about", he said before his trip to Long Island.

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