Proposed U.S. Auto Import Tariffs Rile Carmakers Worldwide

The Trump administration’s threat to tax imported cars by as much as 25% has produced instant alarm among carmakers everywhere.

Industry trade groups in Asia, Europe and the U.S.—along with some members of Trump’s own Republican party—say the levies could have a hugely negative impact on car markets both domestic and foreign, while sharply elevating the likelihood of a global trade war.

Several organizations question the logic of the White House’s intent to justify high tariffs under Section 232 of the Trade Expansion Act of 1962. Germany’s DIHK trade group calls the argument “far-fetched.”

Section 232 applies to shielding domestic production of goods deemed necessary for national defense. Commerce Secretary Wilbur Ross says the statute would be used to ensure that the domestic auto industry remains healthy enough to fund work on advanced technologies. He claims there are decades of evidence that imports have eroded the domestic auto industry.

But Orrin Hatch (R-Utah), who chairs the Senate Finance Committee., says the proposed tariff scheme is “deeply misguided.” Bob corker (R-Tenn.), whose state is home of Nissan and Volkswagen factories, describes the plan as “dangerous.”

Corker suggests Trump’s gambit is an attempt to win midterm election votes for Republic candidates by linking the tariffs to more jobs. But Toyota, which operates 10 car and truck plants in the U.S., says the taxes will produce the opposite result.

Analysts agree that protective tariffs would have the biggest impact on German luxury car companies. Asian carmakers are worried too. South Korean companies, for example, export most of the vehicles they sell in the U.S.

The United Auto Workers union supports White House efforts to protect American jobs. But the union also warns that the Republican-controlled Congress has “totally ignored” the country’s working class. Unifor, which represents auto workers in Canada, describes the U.S. justification for the tariffs “rash and ill-considered.” Jerry Dias, the union’s president, chides that Canada, a centuries-old close ally of the U.S., is no threat to the latter country’s national security.