Global auto powers plotting response to Trump auto tariff threats

[rooster59]

Global auto powers plotting response to Trump auto tariff threats

By Anthony Esposito and David Ljunggren

 

FILE PHOTO: Employees work at an Audi Q5 2.0 production line of the German car manufacturer's plant during a media tour in San Jose Chilapa, Mexico April 19, 2018. REUTERS/Henry Romero/File Foto

 

MEXICO CITY/OTTAWA (Reuters) - Canada, the European Union, Japan, Mexico and South Korea will meet in Geneva next week to discuss how to respond to threats by U.S. President Donald Trump to impose tariffs on U.S. imports of autos and car parts, officials familiar with the talks said.

 

The Trump administration has come under heavy criticism from automakers, foreign governments and others as it considers tariffs of up to 25 percent, a levy critics warn will hike vehicle costs, hurting auto sales and global industry jobs.

 

Several auto manufacturing powers have been talking to each other in recent days about their fears and a possible coordinated response to Trump's "Section 232" investigation, which he ordered on May 23, into whether auto imports are a threat to U.S. security, sources say.

 

The probe could be completed within weeks, although similar ones ordered last year that led to tariffs of 25 percent on steel and 10 percent on aluminum took about 10 months. The Commerce Department has 270 days to offer recommendations to the president after such a probe starts. He then has 90 days to act upon them.

 

It was not immediately clear what kind of response the countries could be looking at, although Canada, the EU and Mexico retaliated with their own tariffs after Trump imposed levies on steel and aluminum imports in March. Another option is to fight the United States at the World Trade Organization (WTO).

 

Deputy ministers will gather in Geneva on July 31 to hear each other's views, a Canadian official and a Mexican official told Reuters, asking to not be named because they were not authorized to talk to the media.

 

"The meeting is meant to bring together major auto producing nations so we can discuss our concerns over the U.S. Department of Commerce's Section 232 investigation of automobiles and parts," said the Canadian government official.

 

Mexico's economy ministry confirmed Deputy Economy Minister Juan Carlos Baker will travel to Geneva for "work meetings about several subjects," including meeting World Trade Organization (WTO) chief Roberto Azevedo. The Canadian foreign ministry declined to comment.

 

According to the WTO website, Azevedo will meet Baker on Monday, followed by Canada's Deputy Trade Minister Timothy Sargent and Japan's Senior Deputy Foreign Minister Kazuyuki Yamazaki on Tuesday. The Mexican official said the meetings were related to the auto tariff issue.

 

Eventual tariffs on autos could hit companies including Korea's Hyundai Motor Co, Japan's Toyota Motor Corp and Germany's BMW, as well as global factories for U.S. brands General Motors Co, Ford Motor Co, and Fiat Chrysler Automobiles NV.

 

Trump's agreement on Wednesday to refrain from imposing car tariffs on the EU in return for reduced trade barriers for U.S. products has helped cool fears of a trade war, but his final decision will not be known until the security investigation is concluded in coming months.

 

The U.S. automakers lowered their full-year profit forecasts on Wednesday due to the trade frictions, and their stocks fell as investors bet the disputes would hurt margins and sales.

 

Although hopes of a breakthrough in U.S.-EU trade talks boosted carmakers on Thursday, the planned meetings are a sign that auto-producing nations want to prepare for the worst.

 

MANAGED TRADE

 

Canadian Foreign Minister Chrystia Freeland raised the need for "cooperation by major interested nations" regarding the U.S. auto investigation during a meeting in Ottawa with South Korean Trade Minister Kim Hyun-chong last week, the South Korean ministry said in a statement after the meeting.

 

On a tour that also took in the United States, Kim broached the idea of working together to face tariffs at a meeting of the Pacific Alliance trade bloc in Mexico on Monday, said another Mexican official and a diplomat with knowledge of the matter, asking to remain anonymous because they were not authorized to speak about it.

 

Officials consulted by Reuters in Canada, Mexico and South Korea all said such discussions were preliminary, with another Canadian official characterizing them as comparing notes on the state of play of the tariff investigation, rather than discussing a coordinated reaction in detail.

 

"We have checked and listened to each other's stance. However, as the auto tariff probe is still under way, it's hard to know how things will turn out at this stage," said a South Korean trade ministry official who declined to be named because he was not authorized to talk to the media.

 

"(Probe) results should come out first to work on a joint response," the official said.

 

Canada is concerned South Korea may achieve an exemption that would give it a competitive advantage, the diplomat said, after the Asian country accepted quotas on its steel exports in return for an exemption from the metals tariffs that hit Canada, Mexico and other allies.

 

Ahn Dukgeun, a Seoul National University professor who advises the government on trade matters, said South Korea's government was divided over what course to take.

 

"South Korea is at crossroads," he said, on whether to "deepen managed trade" with the United States or to get tough, such as complaining to the WTO and using retaliatory tariffs.

 

Because of varying domestic rules on tariff retaliation, coordinating any action between several countries "quickly becomes fiendishly difficult," the diplomat said.

 

"The idea is that we want to know that if we go to the WTO, if we use NAFTA (the North American Free Trade Agreement) in our case or if we retaliate," our partners will be doing similar things, said the diplomat.

 

The conversations are more intense than before the steel and aluminum tariffs, the diplomat and the Canadian official said. One reason may be that countries now know Trump does not hesitate to pull the trigger on tariffs.

 

Another is the economic weight of the auto industry. The United States imported $173 billion of cars and $70 billion of auto parts in 2016, compared to $21 billion of steel.

 

 

-- © Copyright Reuters 2018-07-29

[lovelomsak]

The auto industry should just stop sending cars to America that would show them huh. Then the Americans would have to buy domestic. So sad.

  But of course that will not happen . Drugs and other illegal things have to be smuggled and why shut the door on the easiest way to get them into America. Other countries are waking up to Trump and now know play ball or the easy access to abuse  the system is going to be closed.

Edited July 29, 2018 by lovelomsak

[Nyezhov]

all the protectionism of Europe and Asia was fine when we were rebuilding their countries after the war. Now, the piggy bank is closed. Its ti.e for mutual free trade. I'm sure that Mercedes and BMW are going to do their darndest to prevent tariffs. That means the war will be over before the shot is fired

[Get Real]

2 hours ago, rooster59 said:

Canada, the European Union, Japan, Mexico and South Korea

Only 4 countries and one large block with a better economical growth then US the last 2 years? Really? That´s no match for the dumbest man who ever walked the planet. 

[bristolboy]

1 hour ago, lovelomsak said:

The auto industry should just stop sending cars to America that would show them huh. Then the Americans would have to buy domestic. So sad.

  But of course that will not happen . Drugs and other illegal things have to be smuggled and why shut the door on the easiest way to get them into America. Other countries are waking up to Trump and now know play ball or the easy access to abuse  the system is going to be closed.

The EU is so intimidated that they didn't impose countervailing tariffs on US products.. oh wait.

[bristolboy]

32 minutes ago, Nyezhov said:

all the protectionism of Europe and Asia was fine when we were rebuilding their countries after the war. Now, the piggy bank is closed. Its ti.e for mutual free trade. I'm sure that Mercedes and BMW are going to do their darndest to prevent tariffs. That means the war will be over before the shot is fired

Are you aware that the US imposes a 25 percent tariff on light trucks? Over 60 percent of auto purchases in the US consumer market are light trucks.

[neeray]

2 hours ago, rooster59 said:

The Commerce Department has 270 days to offer recommendations to the president after such a probe starts. He then has 90 days to act upon them.

It remains to be seen if Trump will still be in power at that time, or perhaps still be in power but a lame duck, thus 270 + 90 days may be a moot point.

Further, his very own "soldiers" (aka, republican congress persons) are finally speaking out with their opposition to tariffs. My guess, there won't be any auto tariffs. But we will all have paid the disruptive cost while the bluff went on. It's been a costly fiasco.

[alanrchase]

2 hours ago, Nyezhov said:

all the protectionism of Europe and Asia was fine when we were rebuilding their countries after the war. Now, the piggy bank is closed. Its ti.e for mutual free trade. I'm sure that Mercedes and BMW are going to do their darndest to prevent tariffs. That means the war will be over before the shot is fired

BMW are the biggest exporter of cars in the US.

[overherebc]

Register them in Mexico and hire 'holiday makers' to drive them over the border. ?

[Opl]

2 hours ago, Nyezhov said:

all the protectionism of Europe and Asia was fine when we were rebuilding their countries after the war. Now, the piggy bank is closed. Its ti.e for mutual free trade. I'm sure that Mercedes and BMW are going to do their darndest to prevent tariffs. That means the war will be over before the shot is fired

 

Of the 1.35 million German cars accounting for 8.5 percent of all sales in 2017 in the United States in 2017:

- about 330,000 had been built in the US ( employ an estimated 50.000 workers)  

- about 494.000 were exported from Germany to the U.S , most of the remainder from from Mexico which has a free trade agreement with the U.S  ( as well as GM and Ford)

 

U.S. carmakers import cars on a larger scale than the German companies do. Specifically:

- Ford imported 100,000 cars into the United States on net,

- General Motors imported 760,000 cars on net

- Fiat-Chrysler imported 920,000 on net.

The Big Three U.S. automakers accounted for about 48 percent of U.S. sales.

 

https://money.cnn.com/2018/06/11/news/economy/german-cars-trump-trade/index.html

 

The United States imposes a 2.5% tariff on cars assembled in Europe and a 25% tariff on European-built vans and pickup trucks. Europe imposes a 10-percent tariff on U.S.-built cars which makes it a 13.75% on the average for cars and trucks going across the Atlantic.

https://medium.com/@alfonsollanes/why-does-the-eu-tax-cars-from-the-us-at-10-while-the-us-taxes-european-cars-only-at-2-5-d72082108b77

 

 

 

Edited July 29, 2018 by Opl

[Ulic]

I take what the car companies say with a huge grain of salt. Their only mission is to maximize profits, nothing else. I also fail to see what is wrong with reciprocity. Of course, there should be no tariffs on North American built cars because of NAFTA, that said environmental standards and wages in Mexico have to fall in line with the USA and Canada. Vehicles moving back and forth between Europe and the USA should have the same tariff levels. 

[Andrew65]

4 hours ago, lovelomsak said:

The auto industry should just stop sending cars to America that would show them huh. Then the Americans would have to buy domestic. So sad.

  But of course that will not happen . Drugs and other illegal things have to be smuggled and why shut the door on the easiest way to get them into America. Other countries are waking up to Trump and now know play ball or the easy access to abuse  the system is going to be closed.

For all the people criticising Trump (those who don't like him, I'm not keen on him myself). The EU levies a 10% tariff on American car imports. America levies a 2.5% tariff on EU car imports, after all, the EU is a protectionist trade bloc.

 

Trump, like him or not, doesn't have a monopoly on protectionism. 

[ToddinChonburi]

Do your homework on the tariffs and you will see how the US is getting screwed. Plus the business tax is also part of this.

[Chomper Higgot]

Trump needs to borrow more money from the Chinese to finance his cash handouts to American farmers and businesses who are losing business due to Trump’s trade wars.

 

On the horizon, American farms harvesting produce they can’t sell overseas due to Trump’s trade wars.

 

The Federal Government doling out cash subsidies to people and businesses that were happy making money by trading.

 

A whole army of bureaucrats managing the cash claims and payouts.

 

What happened to the Republican Party that this can happen when the Republicans have the Presidency and a majority in both Congress and the Senate?

 

Perhaps that’s what Trump discussed with Putin, the establishment in the USA of Soviet centralized economy of cash handouts and state controlled grain stores.

 

 

[bristolboy]

1 hour ago, ToddinChonburi said:

Do your homework on the tariffs and you will see how the US is getting screwed. Plus the business tax is also part of this.

I guess if the teacher who assigns you your homework is Donald Trump you might have a fair point. But as it has repeatedly been pointed out with specific examples, the US does a fair bit of screwing itself.

[Nyezhov]

1 hour ago, bristolboy said:

I guess if the teacher who assigns you your homework is Donald Trump you might have a fair point. But as it has repeatedly been pointed out with specific examples, the US does a fair bit of screwing itself.

Rightfully so. Top dog gets fed better.

[bristolboy]

Just now, Nyezhov said:

Rightfully so. Top dog gets fed better.

But Trump is saying just the opposite. So we can agree he's lying?

[Get Real]

1 hour ago, bristolboy said:

I guess if the teacher who assigns you your homework is Donald Trump you might have a fair point. But as it has repeatedly been pointed out with specific examples, the US does a fair bit of screwing itself.

This is great news! So, you mean that he finally and officially admitted that he screwed Stormy Daniels?

[bristolboy]

Just now, Get Real said:

This is great news! So, you mean that he finally and officially admitted that he screwed Stormy Daniels?

Donald Trump caught committing an act of honesty? That'll be the day.

[Get Real]

7 minutes ago, bristolboy said:

Donald Trump caught committing an act of honesty? That'll be the day.

Right! That is the thing that still make international research teams confused. They just can´t find the honesty gene in Trump.

Never mind, though. Trump do not care about that, because he is to stupid to realize it´s something wrong with him.

[Nyezhov]

1 hour ago, bristolboy said:

But Trump is saying just the opposite. So we can agree he's lying?

5555 nice try.

 

But here, as to statement of facts vis a vis opinion......everything that any person in government says is either meaningless or a lie.

[bristolboy]

50 minutes ago, Nyezhov said:

5555 nice try.

 

But here, as to statement of facts vis a vis opinion......everything that any person in government says is either meaningless or a lie.

Ignorance masquerading as cynicism.

[Nyezhov]

36 minutes ago, bristolboy said:

Ignorance masquerading as cynicism.

As opposed to ad hominems masquerading as insight....

[Tug]

Ahhh yes our Donald unencumberd by the thought process it’s all in the gut you know!! I am sure many advisers told him not to but not our Donald he is a very stable genius you know!!! Lol

[observer90210]

To make the whole issue more simple and easy to understand,     

 

(a) no need to mention its all about money in the sense of     "you made that much money in our country with your shit,  our turn to make as much with our shit, in your country"  

 

(b) tit for tat, rules !  ?

Edited July 29, 2018 by observer90210

[sirineou]

15 hours ago, Nyezhov said:

all the protectionism of Europe and Asia was fine when we were rebuilding their countries after the war. Now, the piggy bank is closed. Its ti.e for mutual free trade. I'm sure that Mercedes and BMW are going to do their darndest to prevent tariffs. That means the war will be over before the shot is fired

 

The truth of the mater is that both the US and other countries have negotiated tariffs to protect certain industries, EU has tariffs on cars ,the US has tariffs on Trucks on the average there is only a .6%  (six base points) between the aggregate tariffs between the EU  and the US. 

    Just the Trump two step, first he creates a threat, then he makes bellicose statements,  then he has a meeting, backs off and claims victory, he did it with North Korea and did it with the EU.

in the mean time industries are disrupted workers lose jobs, and products get more expensive.

My radio is set on Bloomberg financial news, I listen to nothing else, financial news report the bottom line and no BS, and I have not heard of any economist or investor  think that any of this is a good idea, If the US wanted to adjust Chinese attitude towards intellectual property and equal access to markets, a unified front between the EU , the US and other players is the way to go.

[Opl]

" Beijing, which this year cut tariffs on all automobiles imported into China, slapped an additional 25 percent levy on U.S.-made cars as of July 6. As a result, China now levies a 40 percent import duty on all cars imported from the United States. BMW (BMWG.DE) said it will raise the prices of two U.S.-made crossover sport-utility vehicles in China to cope with the additional cost of tariffs on U.S. car imports into the world’s biggest auto market. 

https://www.rawstory.com/2018/07/bmw-raise-prices-two-us-made-suv-models-china-due-tariffs/

 

Edited July 30, 2018 by metisdead
Edited as per fair use policy.

[metisdead]

An off topic post and the replies have been removed. 

[quadperfect]

On 7/29/2018 at 8:45 AM, lovelomsak said:

The auto industry should just stop sending cars to America that would show them huh. Then the Americans would have to buy domestic. So sad.

  But of course that will not happen . Drugs and other illegal things have to be smuggled and why shut the door on the easiest way to get them into America. Other countries are waking up to Trump and now know play ball or the easy access to abuse  the system is going to be closed.

The amarican car industry puts out very good cars thanks.

I have owned 50 cars over my life time. Half from usa . Some Foreign cars from germany are better in general but if you think the average american would care ,youre wrong.

The good news is trump will be out of office about the time this comes to pass. So it wont likely matter.

 

[bristolboy]

16 hours ago, Nyezhov said:

5555 nice try.

 

But here, as to statement of facts vis a vis opinion......everything that any person in government says is either meaningless or a lie.

Nice attempt at deflection. The fact is Trump you've agreed that Trump is lying. And if everything people in government say or do is a lie, then the opposite is true. So it's America that's screwing Europe. But wait a minute, other politicians say it's America screwing Europe. Therefore it must be true that Europe is screwing America. Maybe in your world they both can be correct. Not so much in the real one though.