U.S. President Donald Trump said on Wednesday that new auto tariffs were “being studied now,” asserting they could prevent job cuts such as the U.S. layoffs and plant closures that General Motors Co announced this week.
Trump said on Twitter that the 25 per cent tariff placed on imported pickup trucks and commercial vans from markets outside North America in the 1960s had long boosted U.S. vehicle production.
“If we did that with cars coming in, many more cars would be built here,” Trump said, “and G.M. would not be closing their plants in Ohio, Michigan & Maryland.”
The United States currently has a 2.5 per cent tariff on imported cars and sport utility vehicles from markets outside North America and South Korea. The new North American trade deal exempts the first 2.6 million SUVs and passenger cars built in Mexico and Canada from new tariffs.
Several automakers said privately on Wednesday they feared GM’s action could prompt Trump to take action faster than expected on new tariffs.
GM did not directly comment on Trump’s tweets, but reiterated that it was committed to investing in the United States. On Monday, the company said it would shutter five North American plants, stop building six low-selling passenger cars in North America and cut up to 15,000 jobs. The company has no plans to shift production of those vehicles to other markets.
The administration has for months been considering imposing dramatic new tariffs on imported vehicles.
The U.S. Commerce Department has circulated draft recommendations to the White House on its investigation into whether to impose tariffs of up to 25 per cent on imported cars and parts on national security grounds, Reuters reported earlier this month.
“The President has great power on this issue – Because of the G.M. event, it is being studied now!” Trump said.
The prospect of tariffs of 25 per cent on imported autos and parts has sent shock waves through the auto industry, with both U.S. and foreign-brand producers lobbying against it and warning that national security tariffs on EU and Japanese vehicles could dramatically raise the price of many vehicles.
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Trump has also harshly criticized GM for building cars in China. The United States slapped an additional 25 per cent tariff on Chinese-made vehicles earlier this year, prompting China to retaliate.
China currently imposes a 40 per cent tariff on U.S. automobiles, while the United States has a 27.5 per cent tariff on Chinese vehicles.
U.S. Trade Representative Robert Lighthizer said in a statement on Wednesday that he “will examine all available tools to equalize the tariffs applied to automobiles.”
Additional tariffs on Chinese-made vehicle and parts would have a limited impact, said Kristin Dziczek, an economist at the Center for Automotive Research. She noted only a small number of vehicles were exported from China to the United States annually.
The White House previously pledged not to move forward with imposing national security tariffs on the European Union or Japan as long as it was making constructive progress in trade talks.
Trump wants the EU and Japan to buy more American-made vehicles. He wants the EU and Japan to make trade concessions including lowering the EU’s 10 per cent tariff on imported vehicles and cutting nontariff barriers.
The White House in recent weeks has reached out to the chief executives of German automakers including Daimler AG, BMW AG and Volkswagen AG about meeting to discuss the status of auto trade.