economy europe trade

‘TBH, I Doubt It Even Exists’: Some Now Worry Trump Auto Tariffs Based On Imaginary Document

Maybe it only exists in Wilbur's dreams.

Earlier this week, we gently suggested that market participants shouldn’t mistake any tenuous “truce” between Donald Trump and Emmanuel Macron over tariffs related to France’s digital tax for a broader deescalation of trade tensions between Washington and Brussels.

“Nobody should get their hopes up”, we cautioned. “Trump’s position on trade with Europe is still wholly ambiguous”.

EU trade commissioner Phil Hogan last week underscored just how precarious the situation is, calling Trump’s focus on America’s trade deficit “an obsession” and scolding the White House for the president’s “America first” mantra, which Hogan charged with creating “a high-pressure crisis moment for the international trading system”.

Read more: Macron’s Claims Of Trump Tariff Truce May Be False Dawn Amid Fractious US-EU Relationship

Sure enough, Trump spent virtually this entire week threatening the EU with auto tariffs. It went on and on and on.

“They have trade barriers where you can’t trade, they have tariffs all over the place, they make it impossible”, Trump said Wednesday, during a combative press conference in Davos that doubled as a makeshift venting session for impeachment grievances. “They are frankly more difficult to do business with than China”, the president said of America’s European allies. (He’s made similar remarks before, going so far as to refer to the EU as “foes” of the US.)

Trump’s surrogates backed him up – and then some. “If people want to just arbitrarily put taxes on our digital companies, we will consider arbitrarily putting taxes on car companies”, Steve Mnuchin declared, in a ridiculously brazen remark during a panel discussion with UK Chancellor of the Exchequer Sajid Javid. “We think the digital tax is discriminatory in nature”.

“We have not abandoned the tariffs”, Wilbur Ross told reporters in Davos, Thursday. “The auto tariff decision was to negotiate in hopes of a peaceful resolution”.

After missing a deadline to decide on the imposition of auto tariffs under Section 232, the Trump administration was rumored to be considering a separate 301 investigation in order to justify more levies on the Europeans. That would presumably be above and beyond the tariffs on French products in retaliation for the digital tax.

Although Trump managed to cobble together a skeletal “deal” with Shinzo Abe that effectively ensured Japan would be safe from tariffs on its autos and parts, it’s been clear for months that trade talks with Europe were going nowhere fast. At various intervals, experts have emphasized that even under the most optimistic projections, it will take a year or more to finalize the kind of sweeping trade agreement Trump appears to be angling for.

“We think six months will prove insufficient to negotiate and finalize a comprehensive trade deal, particularly since trade negotiations in the EU follow a set procedure that usually lasts several years”, Goldman warned last summer.


The upshot: Even if things went entirely according to plan, we would still be, at best, two years away from an agreement.

In October, tensions between Washington and Brussels ratcheted higher when the WTO green-lighted retaliatory measures against $7.5 billion in EU goods per year in conjunction with the long-running Airbus spat. It was the largest arbitration award in WTO history (and came despite Trump’s repeated claims that the organization is “always f—ing” America).

The USTR promptly announced its intention to tax everything from French wine to cheese to whisky to olives, pork, butter and yogurt. Europe will likely retaliate this year once a parallel dispute involving Boeing is adjudicated.

Further, it is entirely possible that Trump is breaking US law by not being transparent about what, exactly, the thinking is behind the auto tariff threat against America’s European allies. That is, never mind international norms or the WTO or the possibly irreparable damage the administration is doing to transatlantic relations – Trump may be committing a pseudo-impeachable offense by essentially stonewalling Congress (not to mention the public) on the auto tariffs.

“The Trump administration may run into difficulty introducing car tariffs arbitrarily, as Mnuchin said, because the law it has invoked confines the justification to national security”, Bloomberg dryly noted this week, on the way to reminding you that “the Trump administration has so far refused to release a report justifying the possible tariffs despite demands from Congress, where opposition to them is bipartisan”.

Paul Krugman took an amusing look at this on Thursday. We realize some readers likely harbor  more than a little skepticism towards Krugman, so we’ve just excerpted four brief passages from his full piece in order to maximize the chances that you’ll at least consider what he has to say.

If nothing else, what you’ll read below is funny – especially the bit where Paul suggests that one reason why the administration refuses to release the report could be that Ross never even wrote it in the first place.

Via Paul Krugman

And so it was that in 2018 the Trump administration announced that it was beginning a Section 232 investigation of auto imports, especially from Europe and Japan. Every trade expert I know considered the notion that German or Japanese cars constitute a threat to national security absurd. Nonetheless, in 2019 a report from the Commerce Department concluded that auto imports do, indeed, endanger national security.

What was the basis for this conclusion? Well, we don’t actually know — because the Trump administration has refused to release the report.

This stonewalling is clearly illegal. The statute requires that all portions of the Commerce report that don’t contain classified or proprietary information be published in the Federal Register, and it’s hard to believe that any of the report contains such information, let alone the whole thing. Furthermore, Congress inserted a provision in a spending bill last month specifically requiring that the Trump administration turn over the report.

Why won’t Trump obey the law and hand over the document? My guess is that his people are afraid to let anyone see the Commerce report because it’s embarrassingly thin and incompetent. To be honest, I have some doubts about whether the report even exists. Remember, the Commerce Department is run by Wilbur Ross, whom readers of my colleague Gail Collins voted Trump’s worst cabinet member, which is quite a distinction given the competition.


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