Auto Industry Tense as Trump Ponders 25 Percent Tariff

Sam McEachern
by Sam McEachern

The automotive industry is watching intently as the Trump administration ponders a 25 percent tariff on all imported vehicles.

The idea for an imported vehicle tariff was detailed in a statement released by the U.S. Commerce Department last week. The commerce department may implement the tariff under Section 232 of the Trade Expansion Act of 1962, saying a weak auto industry may “threaten to impair the national security,” of the country.

“There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry,” U.S. Secretary of Commerce Wilbur Ross said in the statement.

General Motors stands to lose quite a lot if the tariffs were implemented. GM’s troubled South Korean division recently received a $7 billion bailout from the South Korean government on the grounds that it would remain in the country for at least 10 years. GM Korea, which exported about 25 percent of its production output to the US in 2017, is planning on becoming an even larger export hub for its American parent company – but that plan would go out the window if Trump’s tariff were to pass.

Hyundai Motor Company, which operates the largest automotive manufacturing center in the world in South Korea, could also take a hit if the tariffs were to pass.

SEE ALSO: Steel, Aluminum Tariffs Might Not Happen, Trump Says

In addition to the trade tariff, Trump has allegedly expressed a desire to bar the sales of imported German luxury cars in the US. According to German magazine Wirtschaftswoch, Trump told French President Emmanuel Macron back in April that German car sales could be banned in the country if it could not reach a better trade deal with the EU. According to data obtained by Germany’s auto industry association VDA, German carmakers exported 657,000 vehicles to North America last year, but at the same time, German companies built 804,000 vehicles in the uS.

What’s troubling Trump, most likely, is that the EU exported $43 billion in cars to the U.S. last year, but while imports from the U.S. to the EU were worth $7.3 billion.

Trump is expected to make a decision today on whether or not to end an EU exemption on US imports of steel and aluminum. If he does, it could spark a larger trade war with the EU and US that may effect vehicles imports and cause a ripple effect throughout the auto industry.

[Source: Reuters, Automotive News]

Sam McEachern
Sam McEachern

Sam McEachern holds a diploma in journalism from St. Clair College in Windsor, Ontario, and has been covering the automotive industry for over 5 years. He conducts reviews and writes AutoGuide's news content. He's a die-hard motorsports fan with a passion for performance cars of all sorts.

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