During a 18 February news conference, President Trump indicated his plans to implement tariffs “in the neighbourhood of 25%” on auto imports and semiconductors. According to Trump, the tariffs will come into effect on 2 April as the global auto sector continues to reel from the US’ erratic behaviour on foreign trade.
The development follows a promise on 13 February to enact new “reciprocal tariffs” on all countries that apply VAT on all goods entering their borders. “On trade, I have decided for purposes of fairness, that I will charge a reciprocal tariff, meaning whatever countries charge the United States of America, we will charge them. No more, no less,” the President remarked. “It’s fair to all. No other country can complain.”
The US relies heavily on neighbouring countries Mexico and Canada for imports of automotive parts and fully-assembled vehicles as part of long-standing NAFTA trade agreements. Various European automakers also count the US among their greatest export countries, including the UK, Germany and Italy. Germany, for example, ships around US$17bn’ worth of cars to the US every year.
Trump has been highly critical of the US’ position on foreign trade and has vowed to close the gap on trade deficits it faces with other countries. A 2018 investigation by the Commerce Department during his first term in office found that auto imports weakened the US’ domestic industrial base. He had threatened auto tariffs of 25% at the time, but ultimately did not follow through on it.
This time, the President appears to be unwavering. The overarching goal of the new tariffs is to lure automakers to open manufacturing plants inside the US. “When they come into the United States, and they have their plant or factory here, there is no tariff,” he remarked.
