Trump auto tariffs alienate even allies

Bloomberg

Nobody asked for it, few seem to want it and yet the Trump administration is considering imposing tariffs on imported cars and trucks, threatening not just a shake-up of the global auto industry but political discord even among the president’s allies.
President Donald Trump’s order to investigate auto imports for potential trade penalties on national security grounds came as a surprise and quickly drew opposition from the industry and Republican lawmakers.
Trump appeared focussed on the short term political gains, teasing “big news coming soon for our great American Autoworkers” before he issued the directive. He then invoked the same economic populist themes that drove his presidential campaign, boasting that he would stop “cars pouring into our country and hurting our jobs.”
“He knows that it sounds really good to his base voters and he wants something he can talk about in those campaign rallies that’s going to get a big applause line,” said David B. Cohen, a professor of political science at the University of Akron. “It’ll be very effective, even though many of those rally-goers are going to leave the rally and they’re going to get into their Honda or their Toyota or their Hyundai and not appreciate the irony.”

TARIFFS AND ELECTIONS
If Trump chooses to move ahead with the tariffs, the protectionist maneuver may help energise his working-class base before November’s midterm elections and turn them out to vote in key Senate races. Yet it risks raising car prices, complicating pending trade talks, and antagonising lawmakers into re-examining presidential trade authority.
Trump ordered the investigation under Section 232 of the Trade Expansion Act of 1962, the same power he used to impose global tariffs on imported steel and aluminum earlier this year. A tariff on vehicles of up to 25 percent is under consideration, according to a person familiar with the matter who asked not to be identified.
Trump’s directive, issued in a written statement, surprised the industry, labor, lawmakers and many of the president’s own advisers.
Unions were not told ahead of time, a labor official said, and several Republican members of Congress from states with a sub- stantial auto industry presence said they were unaware of the announcement or learned about it from news reports.
The Auto Alliance, a trade association that includes the three major US-based car manufacturers, said in a statement it is “confident that vehicle imports do not pose a national security risk to the US.”
The only earlier hint of a Section 232 action was in the April 2017 memo from Trump triggering the probe into steel and aluminum that led to the tariffs he announced in March. In that document, “vehicles” are listed as “critical elements of our manufacturing and defense industrial bases, which we must defend against unfair trade practices and other abuses.”
Republicans on Capitol Hill didn’t offer support. And some in Trump’s own party denounced the action as a political ploy that could hurt American trade policy and consumers. The move is “dangerous,” Senate Foreign Relations Committee Chairman Bob Corker of Tennessee said.
“It feels more like it has to do with domestic politics or some other issue, and I hope that will be abandoned quick. I think that’s dangerous and destabilising and should end immediately,” added Corker, whose state is home to Nissan’s North American headquarters and a major Volkswagen plant.

SECTION 232 RATIONALE
The use of Section 232 to order the trade investigation by Commerce Secretary Wilbur Ross stirred particular concern, as some lawmakers said the national security rationale was an obvious ruse.
“It’s an improper use of trade law. So my hope would be that Secretary Ross would review the president’s request immediately and say, ‘no, this is a bad idea,’” said Lamar Alexander, Tennessee’s other senator.
Senate Homeland Security Chairman Ron Johnson said Congress should claw back some of the powers it has given the president to impose tariffs by citing security reasons.
“I would really caution the administration from claiming it’s national security interest when it’s clearly an economic issue,” the Wisconsin Republican said. “Unfortunately, prior Congresses have given any administration an awful lot of authority in these areas. We need to start reclaiming some of that authority.”
Asked about the issue outside the White House after a bill-signing ceremony, House Financial Services Committee Chairman Jeb Hensarling, said, “Frankly, I don’t believe the Honda Accord is a threat to US national security.” Major business groups also slammed the directive.
US Chamber of Commerce President and Chief Executive Officer Thomas Donohue said that if Trump were to take action, it would “deal a staggering blow to the very industry it purports to protect and would threaten to ignite a global trade war.”
Jay Timmons, the chief executive officer and president of the National Association of Manufacturers said that “manufacturers in the United States want to give every advantage to American workers. But incorrectly using the 232 statute will create unintended consequences for US manufacturing workers that will limit the chance for Americans to win.”

BATTLEGROUND DYNAMICS
Still, the action won praise from auto workers, a key constituency in the battleground states of Michigan and Ohio which Trump carried in 2016. “I welcome the fact that they’re investigating this,” United Auto Workers President Dennis Williams said in Detroit. “The United States became a dumping ground for a lot of countries at a very low cost.”
Trump’s public emphasis on auto workers points to his hope that the issue will be a winner with voters in November, even if Republican elected officials remain opposed. “I think your auto workers and your auto companies in this country are going to be very happy,” Trump told reporters before his
announcement.