The Trump administration announced Wednesday that it’s launching a national security investigation into car and truck imports that could result in new U.S. tariffs on vehicles from Europe, Japan and South Korea.
“There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry,” Commerce Secretary Wilbur Ross said in a statement Wednesday.
The probe was initiated using Section 232 of the 1962 Trade Expansion Act, the same provision that allowed President Donald Trump to place a 25 percent tax on imported steel and 10 percent tax on imported aluminum back in March.
Ross went on to say that the major goal of the probe would be to determine if foreign imports are “weakening our internal economy” and “impair national security.” The annoucement comes after Trump tweeted that there would be “big news” for auto workers. (RELATED: Trump Announces New Tariffs On Aluminum And Steel)
The investigation prompted several Asian automakers across Japan and South Korea, including Toyota, Nissan, Honda, and Hyundai to sell their shares on Thursday to protect from higher tariffs.
Stocks fell as Toyota dropped 3.1 percent, Nissan 1.8 per cent and Honda 3.4 percent. In Seoul, Hyundai fell 3.1 percent. The proposed tariffs raise the cost for foreign automakers to export cars and car parts to the U.S., which is the world’s second largest auto market.
The investigation is in line with Trump’s “America First” trade agenda that appealed to Americans during the 2016 elections, when he promised to prioritize reclaiming American manufacturing jobs that were lost to overseas competitors and renegotiate NAFTA to return more auto production to the U.S.
Trump administration officials said before the announcement that the investigation will hopefully cause countries that have been holding out to double down on renegotiating NAFTA.
The threat of tariffs could pressure Canada and Mexico to strike a deal as both countries have been at a stalemate with the U.S. over America’s demand for wage increases in the auto industry and a push to expand North American content in cars. In addition, the investigation will also put pressure on Japan, which exports $168 billion in goods and services to the U.S., and the EU, which makes up $416 billion in exports, to reach a trade deal.
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