President Donald Trump is expected to delay a decision to impose tariffs on auto and auto parts, according to a source with direct knowledge of the issue.
Administration officials fear that imposing duties on autos would hurt talks with China as well as potential trade negotiations with Japan and the European Union, the source said Wednesday.
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The White House also worries that such tariffs could derail efforts to get the new NAFTA deal passed in Congress, as many lawmakers who have foreign automakers’ plants in their districts have called on the president to not impose such tariffs.
“Trump and the White House have realized that with tariffs, the way in is easy but the way out is hard,” said one former senior administration official.
The White House declined to confirm reports that the tariff decision would be delayed. Bloomberg first reported, citing administration officials, that Trump could put off the decision by six months as the U.S. continues to start trade negotiations with the European Union and Japan.
White House National Economic Council Director Larry Kudlow hinted as far back as March that the president could delay the decision, stating that he could take longer than the 90-day window to make the decision.
Trump has until May 18 under the statutory deadline to make a decision, which is when a formal announcement on the delay is expected, Reuters reported. In the past, he has let the deadlines slip before deciding to act on tariffs.
An auto industry source said the logic for auto tariffs is “very weak” given that U.S.-China talks are not close to a resolution.
“Once [tariffs] are applied, the leverage with the EU is gone and EU retaliation would hit just as China’s tariff retaliation is set to occur,” the source said. “On the Japan side, it’s doubtful that the administration wants to poison the well while negotiations are in the nascent stage.”
Trump directed the investigation of auto imports under Section 232 of the Trade Expansion Act of 1962, which allows trade restrictions to be put in place if the Commerce Department finds justification that such imports pose a threat to national security.
The tariffs had been used as a threat to get the EU and Japan to the negotiating table. The U.S. agreed to hold back on the tariffs as long as the economies were making progress in their respective negotiations.
The EU has already threatened to slap tariffs on $23 billion worth of U.S. exports if Trump goes ahead with the the auto duties.
Auto dealers said they would rather have the president put an end any potential tariff threat, arguing that a delay would only continue business uncertainty.
“Delaying this decision is, in itself, a decision to allow ambiguity and insecurity to shadow auto retailers and hinder growth within the industry,” said Howard Hakes, a California auto dealer who serves as the chairman of the American International Automobile Dealers Association.