Trump postpones vehicle duties

Yang, Odell and Kostner – The U.S. government has said that it will postpone its proposed tariffs on European and Japanese vehicles and parts as it continues to negotiate new trade agreements with the European Union and Japan.

In an announcement before the weekend, the U.S.President said he had instructed Robert Lighthizer, the U.S.Trade Representative, to seek agreements to “address the threatened impairment” of national security from vehicle imports. “The United States could still decide to go ahead with the increased duties during the negotiations,” remarked Yang, Odell and Kostner Asset Management in a note yesterday.

“United States defense and military superiority depend on the competitiveness of our automobile industry and the research and development that industry generates,” White House press secretary Sarah Huckabee Sanders said in a statement. “The negotiation process will be led by United States Trade Representative Robert Lighthizer and, if agreements are not reached within 180 days, the President will determine whether and what further action needs to be taken.”

In justifying his stance, Trump contends that “domestic conditions of competition must be improved by reducing imports.”

The decision of whether or not to put the tariffs on vehicles and their parts had to be made over the weekend and “maybe they have enough on their plate for now,” supposed Yang, Odell and Kostner.

Previously, the United States Department of Commerce said the tariffs could be justified on national security grounds. Under U.S. law, the government can postpone its decision by up to six months if it is in the process of negotiating a deal.

In a statement from the European Commissioner for Trade, Cecilia Malmstrom, she said that “we completely reject the notion that our car exports are a national security threat,” adding that the E.U. “is prepared to negotiate a limited trade agreement.”

She also said that officials from the European Union would discuss the matter with the United States Trade Representative next week when they meet in France.

If the vehicle tariffs were implemented, it raised the threat of widening the current trade disputes and could hurt the U.S. as well as European economies.

The European Union has already drafted a list of goods from the United States to hit with tariffs if the United States proceeds with the vehicle duties.

“Not everyone is in favor of the proposed tariffs with carmakers and some U.S. lawmakers against imposing tariffs,” noted Yang, Odell and Kostner.

The U.S. car industry said the tariffs would jeopardize American jobs and increase prices at the dealerships for car buyers.

General Motors, VW, Toyota, and other manufacturers have cautioned the U.S. over the potentially harmful effects imposing tariffs of up to 25 percent on imported vehicles and their parts.

Trump has had a number of discussions with his top officials about the issue over the last few days, and government officials have repeatedly assured the carmakers that they were going to postpone making a decision.

The postponement comes after the U.S. and China traded fresh accusations in their ongoing trade dispute. The United States is trying to come to an agreement with China, which will address what the Americans say are trade abuses by the Chinese.

“Several announcements by General Motors saying that they were going to invest $700 million in three Ohio plants and were making renewed efforts to sell off the company’s shuttered Lordstown facility had also swayed Trump to delay,” said Yang, Odell and Kostner.

“The case remains clear – cars are not a national security threat,” the Alliance of Automobile Manufacturers, a trade group representing General Motors, Volkswagen, Toyota, and other manufacturers said in a statement. “We are deeply concerned that the administration continues to consider imposing auto tariffs.”

An auto industry report from last year estimates that U.S. light-duty vehicle prices would go up by nearly $3,000 on average, including U.S.-made vehicles, slashing yearly new sales by more than a million cars and driving many buyers to the second-hand market.

The same reason – national security- was used previously to impose tariffs on steel and aluminum imports, including metals coming from friendly nations such as the EU, Canada, and Mexico. “Europe retaliated in kind after those duties were put in place and would likely do the same this time around,” said Yang, Odell and Kostner.