As expected, Donald Trump has decided to delay a decision on whether to slap tariffs on imported cars and parts.
Tomorrow was the “deadline” for the White House to tip its next move, and as indicated earlier this week, the president will give negotiations a chance.
Trump today directed the USTR “to address the threatened impairment of the national security with respect to imported automobiles and certain automobile parts from the European Union, Japan, and any other country the Trade Representative deems appropriate” and report back within 180 days.
Read more: Trump Decides Now Not Great Time To ‘Rid Fifth Avenue Of Mercedes’
Whether or not this is a genuine nod to the desirability of solving disputes amicably is questionable, at best. It’s entirely possible the administration is simply trying to avoid a scenario where the US ends up fighting a multi-front trade war at a time when it looks like Beijing will call Trump’s bluff, effectively forcing him to tax everything China exports to the US. A newly conciliatory stance towards metals tariffs on Canada and Mexico points to the same strategy.
You’d be hard pressed to find anyone who fully supports the auto tariff idea. Lawmakers (including some Republicans) don’t like it, Europe is aghast and markets absolutely hate it. Automakers think it’s a bad idea too.
On Friday, data from the European Automobile Manufacturers Association showed EU car registrations slumped for an eighth consecutive month in April.
The news put European automakers on the back foot again – they’re the worst performing sector in Europe for the second day in a row. The two-day slide comes after the SXAP got a reprieve earlier this week when news of the delay in tariffs first crossed.
As documented in the linked post above, Trump’s aggressively hawkish rhetoric on autos goes back a long time. One certainly imagines he’ll drive a hard bargain and at least try to insist on a set of conditions so onerous as to make a quick agreement with Europe and Japan impossible.
It’s also possible that Trump’s irritation with Europe over NATO and Iran will influence his decision making when it comes to the auto tariffs. A rational person would separate the issues, but this administration has a penchant for using unrelated grievances as leverage in trade talks.
As Trump would say, “we’ll see what happens.”
