US TRADE ECON 1

Trump on Friday stepped back from opening another front in his global trade war,             delaying for six months a decision on whether to impose tariffs on foreign cars and parts. 

 

WASHINGTON — President Donald Trump on Friday stepped back from opening another front in his global trade war, delaying for six months a decision on whether to impose tariffs on foreign cars and auto parts.

The delay gives a temporary reprieve to global automakers and their suppliers, which had been bracing for punishing tariffs on cars sent into the United States. The decision, which will primarily benefit car exporters like Germany and Japan, comes as the White House struggles to resolve an escalating trade fight with China.

Still, the move does not signal a final cease-fire in the trade war. The president has seized on tariffs as a source of leverage in negotiations with trading partners like Japan and the European Union, and he is likely to hold out the possibility of tariffs as he pushes for trade pacts that benefit the United States.

Friday morning’s announcement said that conditions for the U.S. industry must be improved by reducing imports and that the U.S. Trade Representative would pursue negotiations to address the situation with the European Union, Japan and potentially other countries.

The delay gives the administration until November to determine whether to impose the tariffs, which could be as high as 25%.

A decision to impose auto tariffs would have been Trump’s most aggressive trade measure yet. His administration has already imposed stiff levies on steel and aluminum and $250 billion worth of Chinese goods. But a tariff on cars and car parts was seen as an economically damaging escalation in the president’s quest to revise trade terms to benefit the United States.

The prospect of a 25% tariff on foreign cars and car parts, as the president has threatened, provoked an outcry from both industry and foreign governments.

But that opposition did not appear to be the primary reason behind the Trump administration’s decision. Instead, U.S. officials believed it was not the right time to pursue the tariffs, given time-consuming trade negotiations in China, as well as talks with Europe and Japan, and a continuing effort to pass the revised North American trade agreement into law. Almost all of the president’s advisers were united in that view, people familiar with their thinking said.

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