Trump Says Car Tariffs Will Be Hiked 'in the Neighborhood of 25%,' Others Will Ratchet
President Donald Trump said that he will "probably" say more about the scope of tariffs on cars "on April 2, but it'll be in the neighborhood of 25%," in response to a question at a press conference Feb. 18.
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He also said that tariffs of at least 25% would be applied to semiconductors and pharmaceuticals, "and it'll go very substantially higher over the course of a year, but we want to give them time to come in" and manufacture in the U.S.
Trump bragged that car companies have canceled planned plants in Mexico, because "they want to build them here."
He said, "Through tariffs and taxes and incentives, they want to come."
In the first Trump administration, the Commerce Department found in a Section 232 investigation that imports of cars and certain car parts were a threat to U.S. national security, concluding: "An American-owned automotive industry that is not competitive in the latest technologies, nor has the ability to retain a large skilled workforce and attract the next-generation workforce, will be unable to remain globally competitive ... ."
The commerce secretary recommended that the administration negotiate agreements, such as the update to the U.S.-Korea free trade agreement and USMCA, that could support domestic automaking.
If those are not concluded or implemented, the secretary said, the president could "impose tariffs of up to 25 percent (in addition to any existing duties) on imports of automobiles and certain automobile parts (engines and parts, transmissions and powertrain parts, and electrical components) in order to increase U.S. production of automobiles and parts to a level sufficient to generate additional revenue to increase R&D investments by American-owned (as well as foreign-owned) manufacturers in the United States. Imports under USMCA Side Letters would not be subject to the tariffs."
Or, the secretary said, there could be additional tariffs of up to 35% on SUVs and crossover vehicles. "The Department of Commerce would work with the U.S. Customs and Border Protection on the most appropriate means to implement this option if selected. Imports under USMCA Side Letters would not be subject to the tariffs."
Trump didn't say which countries' cars would be subject to the tariffs -- including if USMCA-qualifying cars would be exempt -- and during the same press conference, Trump said he appreciates that the European Union dropped its car tariff to match the current U.S. 2.5% most-favored-nation car tariff.
The EU, in fact, hasn't done that, though there's been reporting that it's being considered. "Already we've saved a tremendous amount. If everybody would do that, we'd be on the same playing field," he said.
Trump didn't say that would be enough to spare the EU reciprocal tariffs, however. "They don't take our cars, they don't take our farm products ... they take very little, and we're going to have to straighten that out, and we will, I have no doubt about it."