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Trump may impose tariffs on car imports in latest trade move: sources

By David Shepardson and Jeff Mason
U.S. President Donald Trump looks at a photographer after a meeting with South Korea's President Moon Jae-In at the White House in Washington, U.S., May 22, 2018. REUTERS/Carlos Barria

By David Shepardson and Jeff Mason

WASHINGTON (Reuters) - The Trump administration is considering a proposal to impose new tariffs on imported vehicles, invoking a national security law used to impose tariffs on aluminium and steel, an administration official and three industry officials briefed on the matter said.

Another administration official said the move was aimed partly at pressuring Canada and Mexico to make concessions in talks to update the North American Free Trade Agreement that have languished in part over auto provisions, as well as pressuring Japan and the European Union, which also export large numbers of vehicles to the United States.

"There will be big news coming soon for our great American Autoworkers. After many decades of losing your jobs to other countries, you have waited long enough!" President Donald Trump said in a tweet on Wednesday.

Trump, who has pledged to revive American manufacturing, has launched a series of trade actions, demanding China import more American goods, starting talks to renegotiate NAFTA and imposing tariffs on steel and aluminium imports.

Reuters confirmed a report by the Wall Street Journal that the administration was considering launching a "Section 232" investigation into auto imports that could see tariffs of up to 25 percent imposed on imports.

Both administration sources and the industry sources said the Commerce Department was expected to make a formal announcement as early as Wednesday night.

At a meeting with automakers at the White House on May 11, Trump told automakers he was planning to impose tariffs of 20 percent or 25 percent on some imported vehicles, sources told Reuters and specifically criticized German automakers for exporting a large number of vehicles to the United States.

An ad hoc industry group representing the largest Japanese, German and other foreign automakers called "Here for America," criticized the effort.

"The U.S. auto industry is thriving and growing," said John Bozzella, chief executive of Global Automakers, a trade group representing Toyota, Nissan Motor Co Ltd <7201.T>, Hyundai Motor Co <005380.KS> and others, who also speaks for the broader group.

Bozzella noted 12 million cars and trucks were produced in the United States last year. "To our knowledge, no one is asking for this protection. This path leads inevitably to fewer choices and higher prices for cars and trucks in America,” Bozzella said.


'BIG TRADE IMBALANCE!'

Trump has railed against European auto imports and tariffs.

“If the E.U. wants to further increase their already massive tariffs and barriers on U.S. companies doing business there, we will simply apply a Tax on their Cars which freely pour into the U.S.,” Trump wrote on Twitter in March.

“They make it impossible for our cars (and more) to sell there. Big trade imbalance!"

German automakers Volkswagen AG <VOWG_p.DE>, Daimler AG <DAIGn.DE> and BMW AG <BMWG.DE> all have large U.S. assembly plants. The United States is the second-biggest export destination for German auto manufacturers after China, while vehicles and car parts are Germany’s biggest source of export income.

In March, Germany's automotive industry association said: "A trade war between the USA and Europe must be avoided at all costs. In such a trade war there are only losers on all sides.”

The White House could opt to negotiate with individual countries about whether auto tariffs take effect. Trump would have to launch a probe before he could impose the tariffs.

The report caused U.S. automaker shares to jump and hit those of overseas companies like Toyota Motor Corp <7203.T>, with its New York-traded shares falling 0.67 percent.

It was unclear how the administration would be able to use a measure aimed at ensuring national security in the car sector.

Trump has long made the imbalance in auto trade a key concern, repeatedly threatening to impose tariffs on imported vehicles.

The United States imported 8.3 million vehicles in 2017 worth $192 billion, including 2.4 million from Mexico, 1.8 million from Canada, 1.7 million from Japan, 930,000 from South Korea and 500,000 from Germany, according to U.S. government statistics. At the same time, the United States exported nearly 2 million vehicles worldwide worth $57 billion.

Asked if the measures would hit Mexico and Canada, a Mexican source close to the NAFTA talks said: “That probably is going to be the next battle.



(Reporting by David Shepardson and Jeff Mason; Additional reporting by James Oliphant, Makini Brice, David Shepardson and David Lawder in Washington and Anthony Esposito in Mexico City; Writing by Lisa Lambert; Editing by Jonathan Oatis and Peter Cooney)