Trump's Auto Tariff Threat Blasted by Senior GOP Lawmakers

(Bloomberg) -- Senior Republican senators and business leaders called on President Donald Trump to drop his threat to impose sweeping new tariffs on imported cars and trucks, with one senator calling the idea "deeply misguided."

Senator Orrin Hatch of Utah said Thursday the move would amount to a tax paid by American car buyers. Ron Johnson of Wisconsin said Congress should take back some of the powers it has given the president to impose tariffs on national security grounds, while Bob Corker of Tennessee said the administration “is using trade policy maybe too transactionally.”

The U.S. Chamber of Commerce said in a statement it "strongly opposes" the Trump administration’s threat of tariffs. If carried out, the proposal would “threaten to ignite a global trade war,” the group said.

The comments came after Trump directed Commerce Secretary Wilbur Ross Wednesday to initiate a so-called Section 232 national-security investigation into imports of cars, trucks and vehicle parts.

The investigation will examine whether the decline of the U.S. automobile sector threatens to weaken the U.S. economy by reducing research and development, skilled jobs and more advanced manufacturing processes like electric and autonomous vehicles, Commerce said.

Nafta Revisions

The action may be an attempt to pressure Trump’s North American Free Trade Agreement partners into striking a deal that would help drive manufacturing jobs back to the U.S. An agreement over auto-production rules has been one of the key sticking points in nine months of talks over revising the pact.

Lawmakers suggested the president is misusing his power.

“I would really caution the administration from claiming it’s national security interest when it’s clearly an economic issue,” said Johnson, the chairman of the Homeland Security Committee.

Hatch, the Finance Committee chairman, said the administration’s action is “deeply misguided.”

"Taxing cars, trucks and auto parts coming into the country would directly hit American families who need a dependable vehicle, whether they choose a domestic or a global brand,” Hatch said.

Second-ranking Senate Republican John Cornyn said, “I know a number of our members are concerned about using national security as a cover for essentially economic protectionism." But he said Congress should wait until Ross completes the investigation before considering legislation to reduce presidential trade powers.

‘Dangerous and Destabilizing’

Corker, chairman of the Senate Foreign Relations Committee, said at a hearing with Secretary of State Mike Pompeo that the use of national security powers for auto tariffs appears to be an abuse of the president’s authority. Corker’s state is home to significant operations of Nissan Motor Co. and Volkswagen AG.

“It feels more like it has to do with domestic politics or some other issue and I hope that will be abandoned quick," Corker said. "I think that’s dangerous and destabilizing and should end immediately.”

The Commerce Department said it soon will announce a hearing date and invite comment from businesses and the public. The process could last weeks or months before it would present its recommendation to the president, who gets the final say. The administration went through a similar process before imposing tariffs on imported steel and aluminum earlier this year.

The levies on metals and some of Trump’s other trade moves have stoked protests from traditional U.S. allies. This week he backed away from a trade arrangement the administration had just announced with Beijing, soon after Treasury Secretary Steven Mnuchin declared a trade war with China “on hold.”

Auto Workers

At least one group is getting behind Trump’s plan: auto workers.

“I welcome the fact that they’re investigating this,” United Auto Workers President Dennis Williams told reporters Thursday in Detroit. “The United States became a dumping ground for a lot of countries at a very low cost.”

Still, Williams said he still doesn’t know “the mechanics” of what Trump will do.

The Alliance of Automobile Manufacturers, which represents companies including General Motors Co., Ford Motor Co., Fiat Chrysler Automobiles NV and Toyota Motor Corp., said in a statement that the process cited by Trump is rarely used and added, "We are confident that vehicle imports do not pose a national security risk to the U.S."

"We urge the administration to support policies that remove barriers to free trade and we will continue to work with them and provide input to achieve that goal,” the automakers’ group said.

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