Trump's auto tariff threats roil GOP

Donald Trump has asked commerce secretary Wilbur Ross to look into the possibility of imposing tariffs up to 25% on auto imports for national security reasons.

The U.S. imported almost $200 billion in automobiles last year, and more than 50% of that came from either Canada or Mexico.

The Hill:

The administration would be conducting a Section 232 investigation to impose tariffs on autos.  The Section 232 law, which is rarely used, allows tariffs to be placed on imports in the name of national security, but many think such concerns do not apply to imported cars.

There are "a number of members who are concerned about using national security as a cover for essentially economic protectionism," Cornyn said.

Sen. Bob Corker (R-Tenn.) raised the issue with Secretary of State Mike Pompeo during an unrelated hearing, saying the administration is running its trade policy "too transactionally."  He called the floated auto tariffs "absolutely an abuse" of the president's authority. ...

The prospect of auto tariffs comes as Republicans are already on edge over a reported deal between Trump and Beijing to save Chinese telecommunications giant ZTE and less-than-productive talks aimed at renegotiating the North American Free Trade Agreement (NAFTA).  They also come on the heels of Trump's decision to impose steep tariffs on steel and aluminum imports for national security reasons using the same Section 232 law.

"I didn't think aluminum and steel met the test," said Sen. Roy Blunt (R-Mo.), a member of the GOP's Senate leadership.  "I certainly don't think automobiles meet the test.  I just don't think it's a national security issue."

Is protecting the auto industry really a matter of national security?  Ross thinks so:

"National security is broadly defined to include the economy, to include the impact on employment, to include a very big variety of things," Ross said on CNBC's "Squawk Box."

"Economic security is military security.  And without economic security, you can't have military security," he added.

There may be something to that.  But it's a stretch to say an industry that made 17 million cars last year in the U.S. needs to be protected because of national security.

Section 232 allows Trump to bypass Congress, which I'm sure is why he is doing it.  And Republicans, running in states where foreign auto plants are located, are no doubt nervous about anything that could impact jobs in their state or district. 

Editor Lifson believes that the tariff threat isn't real, that this is just a bargaining chip.  That may be.  But any threat of a tariff on a vital industry like autos makes both politicians and business groups nervous.

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