USA vehicle imports may be the next target for tariffs

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Sure, investors in major Japanese and South Korean vehicle makers were rattled Thursday: The likes of Toyota and Hyundai tumbled around 3% after the Commerce Department said overnight it is considering the new tariffs on national-security concerns.

The president's latest gambit is a threat of major tariffs against foreign vehicle manufacturers, after he directed Commerce Secretary Wilbur Ross Wednesday to conduct a Section 232 investigation into whether foreign competition in the auto sector represents a threat to national security risk.

The president says in a statement 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.

The commerce department said the investigation under Section 232 of the Trade Expansion Act of 1962 would investigate whether vehicle and parts imports were threatening the industry's health and ability to research and develop new, advanced technologies.

China is a relatively minor player in the US auto import market, ranked 10th in dollar terms, but its massive vehicle industry is eager to expand overseas. The initiation of the trade investigation could be seen as an attempt to gain leverage in the talks with the two US neighbours.

Trump has repeatedly vowed to impose tariffs to protect the United States auto industry, having been elected in 2016 on a promise to bring back millions of lost American jobs from overseas.

Asked about Trump's tweet earlier Wednesday, Foreign Affairs Minister Chrystia Freeland said she is in continuous contact with her USA and Mexican counterparts and said her suitcase is packed if she is needed to "meet anywhere to get this done".

'I am - even more than I was with steel and aluminum - trying to figure out where a possible national security connection is, ' Trudeau said at the luxurious riverside hotel that will be the site of a Group of Seven leader's summit in early June. This could also lead to less choice. Formal re-negotiations between Canada, Mexico and the United States have been ongoing since last summer.

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The biggest exporters of new passenger vehicles and light trucks to the United States a year ago were Mexico, Canada, Japan, Germany and South Korea, according to usa government figures.

US President Donald Trump said that Canada is "very spoiled" and "very hard to deal with" in North American Free Trade Agreement (NAFTA) negotiations. The biggest exporters of auto parts were Canada, Mexico, China, Germany and Brazil. "We are very dependent on the ability to bring in parts from other parts of the world for final production in the USA, and if that's no longer financially viable, the question becomes, is the production of vehicles in this country going to be financially viable?"

Trump said what Canada and Mexico are asking for in a renegotiated NAFTA is "not fair" and he called both countries "spoiled because nobody's done this" - presumably referring to previous American administrations that have not stood up to their NAFTA partners.

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"It's clear we don't take anything lightly but it's certain that to try and understand what the links are between the national security of the USA and cars potentially made in Ontario, it's starting to become less and less pertinent or justified in any kind of rigorous or intellectually logical way".

"Measures like this are ultimately about protecting American manufacturing jobs in states that voted for Trump rather than national security", Morningstar analyst David Whiston said in a note.

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

Foreign trade in an increasingly globalized economy involves a complicated array of rules and regulations that should be subject to frequent review and adjustment. The E.U. adds 10 percent to the cost of imported American models, while the United States imposes a levy of 2.5 percent on most imported cars and 25 percent on most pickups.

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