Trump administration weighing new tariffs on imported vehicles

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

Earlier Wednesday, Trump, who has repeatedly pledged to revive American manufacturing, said that "big news" was coming that would be welcomed by us auto workers but he gave no details.

BMW, which along with Mercedes has expanded production capacity in the USA, said in its own statement that "barrier-free access to markets is therefore a key factor not only for our business model, but also for growth, welfare and employment throughout the global economy".

"We urge the Administration to support policies that remove barriers to free trade and we will continue to work with them and provide input to achieve that goal", she said. Trump would have to launch a probe before he could impose the tariffs. Yet it risks raising auto prices, complicating pending trade talks, and antagonizing lawmakers into re-examining presidential trade authority.

The president said in the statement that "core industries such as automobiles and automotive parts are critical to our strength as a Nation".

The investigation, known as a Section 232 investigation, would determine whether the import of cars and truck threatens national security interests. That could lead to tariffs of up to 25 percent on the same "national security" grounds used to impose US steel and aluminum duties in March.

Media captionCan tariffs really save an industry?

"Today, I met with Secretary of Commerce Wilbur Ross to discuss the current state of our automobile industry".

"It's an improper use of trade law".

NDP Leader Jagmeet Singh said he didn't know if anyone should be surprised that Trump made a comment of that nature. "Invoking national security would be even more far-fetched in the case of the vehicle industry", he said. "We need to start reclaiming some of that authority".

"I think your autoworkers and your auto companies in this country are going to be very happy with what's going to happen", Trump said, adding, "You'll be seeing very soon what I'm talking about".

Major business groups also slammed the directive.

Trump said what Canada and Mexico are asking for in a renegotiated NAFTA is "not fair" and he called both countries "spoiled because nobody's done this" - presumably referring to previous American administrations that have not stood up to their NAFTA partners.

Automobile rules of origin is one of several contentious issues at the heart of the renegotiation of the North American Free Trade Agreement. America's capacity to churn out cars hasn't been "a meaningful driver of national security" for the USA since World War II, Clayton Allen Height Capital Markets analyst said in a client note. But even the powerful United Auto Workers doesn't sound convinced that hitting vehicle imports with tariffs is a good idea.

"Now it's very hard to get back to a reciprocal arrangement", Ross said in an interview on CNBC, a day after announcing the investigation. "The United States became a dumping ground for a lot of countries at a very low cost".

President Trump is weighing new protections for domestic automakers, saying American auto workers have "waited long enough".

At a meeting with automakers at the White House on 11 May, Trump told them he was planning to impose tariffs of 20% or 25% on some imported vehicles, sources told Reuters, and specifically criticized German automakers for exporting a large number of vehicles to the United States. Canada and Mexico are the top two vehicle suppliers to the United States, so any tariffs would hurt them the most.

"China opposes the abuse of national security clauses, which will seriously damage multilateral trade systems and disrupt normal worldwide trade order", Gao Feng, a spokesperson for the Chinese Ministry of Commerce said. "It divides the Democratic coalition, particularly among union members".

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