Published: Sat, May 18, 2019
Economy | By

Trump delays auto tariffs for 6 months

Trump delays auto tariffs for 6 months

Trump's original tariff order metals targeted the European Union, exempting the USA neighbors.

The two countries issued a joint statement on Friday confirming that they had agreed to eliminate the tariffs within 48 hours.

President Donald Trump reduced tariffs on Turkish steel imports Thursday from 50% to 25%, citing what he said were necessary import reductions.

Late Friday morning, President Donald Trump and Trudeau wrapped up their third phone call in less than a week on the tariff dispute, which includes Canada's decision to retaliate with more than $16 billion of its own punitive levies on American products. Not even American automakers support it.

European Trade Commissioner Cecilia Malmstroem said on Twitter that "we completely reject the notion that our auto exports are a national security threat". "This action delivers a welcome burst of momentum for the USMCA in Congress, and we urge the administration and Congress to continue their efforts to chart a path toward its approval as soon as possible". "By boosting auto prices across the board and driving up vehicle fix and maintenance costs, tariffs are essentially a massive tax on consumers".

Trump imposed the tariffs on steel and aluminum in March 2018 on major trade partners, including the European Union and Japan, citing the abundance of Chinese goods being sold in the US and putting the country's businesses at risk.

The Canadian prime minister, Justin Trudeau, said the move should clear the way for the ratification of the United States Mexico Canada Agreement (USMCA) reached late previous year, which replaces the North American Free Trade Agreement (Nafta). In fact, the Canadians and Mexicans did go along with a revamped regional trade deal that was to Trump's liking. But the administration had refused to lift the taxes on their metals coming into the United States until Friday.

Trump had faced a Saturday deadline to decide what to do about the auto tariffs.

In a statement, the White House said that Commerce Secretary Wilbur Ross has determined that imported vehicles and parts are a threat to national security. "China ought to take note/start dealing in good faith & take Pres Trump seriously".

FILE PHOTO: U.S. Trade Representative Robert Lighthizer speaks to an aide after he leaves a meeting with House Speaker Nancy Pelosi at the U.S. Capitol in Washington, U.S., May 15, 2019.

USA lawmakers with constituents suffering from Canadian and Mexican retaliation, including Senate Finance Committee Chairman Chuck Grassley, also said they would not consider a USMCA vote with the tariffs in place. Talks broke off last week with no resolution. The administration blamed Chinese overproduction for depressing global steel and aluminum prices, driving many US mills out of business.

US automakers ostensibly would benefit from a tax on their foreign competitors.

Canada and Mexico reacted to the steel tariffs by imposing tariffs on USA farming products and other goods. Alcoa Corp., the largest USA aluminum producer, declined 1.9%, after sliding as much as 2.5%.

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