U.S. launches national security probe of vehicle imports

The Trump administration onWednesday launched a national security investigation into carand truck imports that could lead to new U.S. tariffs similar tothose imposed on imported steel and aluminum in March.

The Commerce Department said the probe under Section 232 ofthe Trade Expansion Act of 1962 would investigate whethervehicle and parts imports were threatening the industry's healthand ability to research and develop new, advanced technologies.

"There is evidence suggesting that, for decades, importsfrom abroad have eroded our domestic auto industry," CommerceSecretary Wilbur Ross said in a statement, promising a"thorough, fair and transparent investigation."

The move opens a new front in Trump's "America First" tradeagenda aimed at clawing back manufacturing jobs lost to overseascompetitors.

In addition to the 25 per cent tariffs on steel and 10per cent tariffs on aluminum, the administration has threatenedtariffs on $50-billion worth of Chinese goods over intellectualproperty complaints. It is also trying to renegotiate the NorthAmerican Free Trade Agreement to return more auto production tothe United States.

Commerce said the probe would determine whether lostdomestic production had weakened the U.S. "internal economy" andits ability to develop connected vehicle systems, autonomousvehicles, fuel cells, electric motors and batteriesandadvanced manufacturing processes.

In a separate statement, President Donald Trump said: "Coreindustries such as automobiles and automotive parts are criticalto our strength as a nation."

Pressure on Canada

A Trump administration official said before the announcementthat the expected move was aimed partly at pressuring Canada andMexico to make concessions in talks to updateNAFTA thathave languished in part over auto provisions, as well aspressuring Japan and the European Union, which also export largenumbers of vehicles to the United States.

Earlier on Wednesday, Trump told reporters that Canada and Mexico have been "very difficult" and "spoiled" at the bargaining table.

He also appeared to foreshadowthenational security investigation, saying via Twitter:"There will be big news coming soon for our greatAmerican Autoworkers."

An ad hoc industry group representing the largest Japanese,German and other foreign automakers called Here for Americacriticized the effort.

"The U.S. auto industry is thriving and growing," said JohnBozzella, chief executive of Global Automakers, a trade grouprepresenting Toyota, Nissan Motor Co. Ltd., Hyundai MotorCo. and others, who also speaks for the broadergroup.

Bozzella noted 12 million cars and trucks were produced inthe United States last year. "To our knowledge, no one is askingfor this protection. This path leads inevitably to fewer choicesand higher prices for cars and trucks in America,"Bozzellasaid.

Threat against EU

Trump has railed against European auto imports and tariffs, and in March threatened to impose a tax on cars from the EU

German automakers Volkswagen AG, Daimler AGand BMW AG all have large U.S. assemblyplants. The United States is the second-biggest exportdestination for German auto manufacturers after China, whilevehicles and car parts are Germany's biggest source of exportincome.

In March, Germany's automotive industry association said atrade war between the U.S.and Europe "must be avoided at allcosts."

The United States imported 8.3 million vehicles in 2017worth $192 billion, including 2.4 million from Mexico, 1.8million from Canada, 1.7 million from Japan, 930,000 from SouthKorea and 500,000 from Germany, according to U.S. governmentstatistics. At the same time, the United States exported nearly twomillion vehicles worldwide worth $57 billion.

Asked if the measures would hit Mexico and Canada, a Mexicansource close to the NAFTA talks said: "That probably is going tobe the next battle."