US weighs imported auto tariffs for national security: EU and Germany fear trade conflict

Amidst prevailing tensions due to the United States imported aluminium and steel tariffs, Trump administration weighed slapping tariffs on imported cars on Thursday, May 24, 2018, over national security concerns.

Commerce Secretary Wilbur Ross said on Wednesday, May 23, that he had initiated a so-called Section 232 investigation on auto trade to determine whether the car imports were weakening the internal economy or impairing the national security of the US. He even said that this would provide him the legal rights to impose tariffs on finding US national security at risk, but certainly after consulting Donald Trump on this matter.

The European Union, which had been lobbying with the US for a permanent reprieve from US imported aluminium and steel tariffs, expressed annoyance at this auto tariffs announcement. Both the EU and German automakers reacted with dismay on Thursday and threatened that this new US tariff movement could lead to trade conflict between the countries.

“We’ll, of course, see what that is, what the investigation leads to, but as far as we can see this is something which is also against the WTO (World Trade Organization),” EU Trade Commissioner Cecilia Malmstrom said in Brussels.

European Commission Vice President Jyrki Katainen said, “It is very difficult to imagine (car imports) create any sort of threat to the national security.” 

German’s auto giants even did not let go the chance to add to the criticism. Global behemoth Volkswagen condemned Washington’s “one-sided protectionism”, saying “only free and fair trade secures increased prosperity”.

The sentiment was echoed by luxury carmaker BMW, as well, which said, “barrier-free access to markets was key to global growth and employment.”

The German Chambers of Commerce and Industry (DIHK) said this movement should be seen as a provocation, after calculating that autos and car parts exports to the US that accounted for US$ 139.9 billion over a quarter last year.

Economist Marcel Fratzscher of the DIW think-tank in Berlin thinks that these new auto tariffs threats by the US may make things even worst. He tweeted, “Evidence of significant economic damage due to the trade conflict is mounting.”