Published: Sat, May 26, 2018
Worldwide | By Gretchen Simon

Donald Trump: Mexico and Canada ‘Very Spoiled’ with NAFTA

Donald Trump: Mexico and Canada ‘Very Spoiled’ with NAFTA

The backlash from congressional Republicans comes after Trump, on Wednesday, asked the Commerce Department to investigate whether he could levy upward of 25 percent tariffs on imported automobiles under Section 232 of trade law. Eighteen minutes later, Ross said he had done so.

Trump said in a statement on Wednesday that "core industries such as automobiles and automotive parts are critical to our strength as a nation".

The tariff proposal was first reported by the Wall Street Journal.

But even the powerful United Auto Workers doesn't sound convinced that hitting vehicle imports with tariffs is a good idea.

The talks have been underway for more than nine months and appear likely to continue into 2019, Treasury Secretary Steven Mnuchin said this week.

It's important to point out automobiles have been one of the most contentious topics in NAFTA negotiations, as the Trump administration reportedly wants to limit duty-free status to the vehicles that have their most of their parts created in the USA and North Americas. About 95 per cent of Canadian-made vehicles are exported to the United States. It means the U.S.is growing faster than its southern neighbor.

"Increasingly frustrated by stalled NAFTA talks, President Trump's attempt to raise auto tariffs may be tactic to drive Canada and Mexico (especially the latter) to compromises", Valliere said. "I am not happy with their requests", Trump said of the two countries.

John Bozzella, the CEO of Washington-based auto industry body Global Automakers, said the planned tariffs would be bad for USA consumers.

Currently, the United States charges just 2.5% on auto imports, which is lower than the European Union's 10% and China's 25% - although the latter country will lower its tariff to 15% from 1 July.

"The BMW Group is committed to free trade worldwide". Mexicans previous year purchased nearly $19 billion of American corn, dairy and soybean products.

"The prime minister also raised strong concerns about the U.S.'s section 232 investigation on automobile imports, given the mutually beneficial integration of the Canadian and American auto industries", the readout said. He then determines the final tariff figure, if any. The administration has said the ZTE situation will be decoupled from securing a wider trade deal with China.

"Arguing that passenger cars are a national security issue doesn't pass the laugh test", he said. "We don't have a shortage; our companies are not now in trouble; and there are plenty of alternative sources from reliable allied suppliers". The case for autos will be harder to make.

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German carmakers produced 804,000 cars at local factories in the United States and exported 657,000 German-made cars into North America previous year, according to German auto industry association VDA.

While the domestic steel and aluminum industries have been hard-hit by foreign competition, domestic automakers have largely held their own in recent years.

NDP Leader Jagmeet Singh said he didn't know if anyone should be surprised that Trump made a comment of that nature.

"One-sided protectionism has never helped anyone in the long term".

This muted reaction is a testament to the global auto industries tendency to produce where it sells.

That visit follows on the heels of last week's trek by the Canada-U.S.

Media captionCan tariffs really save an industry? At the same time, the United States exported almost 2 million vehicles worldwide worth $57 billion.

In 2017, Mexico accounted for the largest share of imports of new passenger vehicles into the US, at 24 percent.

The risk of tariffs is not just a problem for German carmakers, with shares in France's PSA Group and Renault also falling by more than 1 percent.

United Auto Workers union President Dennis Williams said he supports Trump's trade policies and his efforts to protect American workers from competition from low-wage countries.

Although a large portion of the US's most popular auto models, including those from foreign brands (such as the upcoming BMW X7), are already manufactured within its borders, many are imported from other countries.

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