Trump expected to delay car tariffs as Europe invests in US

Bloomberg

The Trump administration may delay a decision on whether to slap tariffs on European automobiles after an intense lobbying campaign by German carmakers highlighted plans to shift global production to American suppliers, people familiar with the White House deliberations said.
In May, President Donald Trump gave himself a deadline of mid-November to decide whether to impose levies on cars and auto parts from the European Union. The EU threatened to retaliate with tariffs on $39 billion of American goods if the president carried out his threat.
Trump is expected to extend this week’s deadline again, according to people familiar with the plans, but the president has not yet made a final decision.
Following months of heavy lobbying, auto producers including Volkswagen AG and Daimler AG, who have plans to shift parts of their global production to suppliers in the US, made headway in convincing US trade negotiators that their investments forestall the need for Trump to follow through on the car tariff threat, which could be as high as 25%, according to the people, who asked not to be identified discussing private deliberations.

Fruitful Negotiations
Commerce Secretary Wilbur Ross, in an interview with Bloomberg TV earlier this month, signalled that a postponement was likely.
“Our hope is that the negotiations we’ve been having with individual companies about their capital investment plans will bear enough fruit that it may not be necessary to put the 232 fully into effect, may not even be necessary to put it partly in effect,” said Ross, referring to the national-security investigation under Section 232 of a 1962 trade law.
European Commission President Jean-Claude Juncker backed up Ross’s assertion last week, telling German newspaper Suddeutsche Zeitung that Trump won’t follow through on his threat.
A 25% US levy on foreign cars would add 10,000 euros ($11,000) to the sticker price of EU vehicles imported into the country, according to the Brussels-based European Commission, the bloc’s executive arm.
US ambassador Richard Grenell has acted as an intermediary over the past few months, speaking with German carmakers and telling them they need to create more value and more jobs in the US, the people said. Some of those companies have said they’re ready to switch parts of their Mexican production to US suppliers.

White House Meeting
The move comes after German companies have already announced plans to expand their US operations as sales projections in North America exceed those at home.
Carmakers have been hinting for more than a year that they planned to shift key parts to the US, and the chief executive officers from Volkswagen, Daimler and BMW AG attended a meeting at the White House last November to discuss a new trade deal.
Volkswagen plans to invest $800 million at its only US vehicle factory located in Chattanooga, Tennessee, which will create at least 1,000 new jobs. Daimler, has earmarked
$ 1billion on investments to expand vehicle manufacturing at its Tuscaloosa factory in
Alabama.