COLUMNS

For Trump's Auto Tariff Threats, Credibility Is the Name of the Game

undefined and Senior Global Analyst at RANE
Matthew Bey
Senior Global Analyst at RANE, Stratfor

Nov 15, 2018 | 22:22 GMT

This image shows vehicles traveling through Brooklyn. The White House will decide soon whether to claim the power to impose tariffs on auto imports it deems unfair.
Cars drive through afternoon traffic in Brooklyn on July 30, 2018, in New York City. 

(SPENCER PLATT/Getty Images)

Highlights

  • In a decision that will have global implications, the United States will decide within the next few months whether it should place tariffs or quotas on auto imports.
  • The widespread implementation of such tariffs is not a given. Washington hopes to use the threat of the fees to seal concessions from major trading partners in which the auto sector makes up a significant chunk of the U.S. trade deficit.
  • Mexico and Canada have already secured tariff exemptions as a part of the USMCA and are unlikely to be targeted unless their auto exports exceed quotas they've already agreed to.
  • Japan and South Korea are positioned to avoid the pain of tariffs because they have agreed to voluntary export restrictions (or quotas) or reached deals as a part of free trade talks.
  • As the United States puts pressure on the European Union to break down barriers — including those in the agricultural sector — in upcoming free trade talks, German auto exports will face a higher risk of U.S. tariffs.

You cannot have national security without economic security. That has been a rallying cry for President Donald Trump since he moved into the White House in 2017. Trade has been a particular area of administration focus, and with that has come scrutiny of the buying and selling of automobiles and parts. For the past three months, Stratfor has examined what would happen to the global auto market if the United States moved forward with the administration's proposed tariffs on imports of vehicles and parts. It appears as if the White House is close to a decision on whether it can claim legal justification to impose those levies....

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