US steel industry and car makers lead Trump tariff revolt

Steel users mount court challenge as carmakers warn of surge in prices

A steel plant in Braddock, Pennsylvania. The American Institute for International Steel said it had lodged a court action to have the law Donald Trump used to impose steel tariffs ruled unconstitutional. Photograph: Getty Images

A steel plant in Braddock, Pennsylvania. The American Institute for International Steel said it had lodged a court action to have the law Donald Trump used to impose steel tariffs ruled unconstitutional. Photograph: Getty Images

 

The backlash against Donald Trump’s tariffs grew on Wednesday as steel users challenged them in court and carmakers warned of a surge in prices if the US president delivered on threats to extend them to more valuable auto imports.

In the most significant legal challenge so far to Mr Trump’s trade policies, the American Institute for International Steel said it had lodged an action in the US Court of International Trade to have the 1962 statute that Mr Trump used to impose steel tariffs ruled unconstitutional.

The president last year invoked a provision known as “section 232” of the law to launch an investigation into whether steel and aluminium imports posed a threat to US national security. Last month he launched a similar probe into imports of cars and parts from around the world worth more than $330 billion last year.

However, Mr Trump has dropped plans to impose new restrictions on Chinese investment in the US, bowing to pro-business advisers within his own administration who warned it would damage the economy by chasing away foreign businesses.

The decision was a blow to China hawks in the White House, who had advocated a new system that would have allowed US regulators to bar Chinese acquisitions in technology and other strategic industries.

Instead, Mr Trump threw his weight behind legislation currently in Congress that would strengthen the existing national security review process, but only at the margins.

“This legislation . . . will enhance our ability to protect the United States from new and evolving threats posed by foreign investment while also sustaining the strong, open investment environment to which our country is committed,” Mr Trump said in a statement. 

Markets cheered

Financial markets, which have become increasingly spooked by the burgeoning Sino-American trade war, were cheered by the decision, with investors seeing it as a signal Mr Trump is ultimately seeking to strike a deal with Beijing rather than engage in a protracted and damaging conflict.

The challenge to the tariffs comes as pro-trade Republicans in Congress, backed by the US Chamber of Commerce and other business groups, seek to roll back the law and rein in the president’s ability to impose further tariffs. They have pointed to what they say is the potential economic damage from the tariffs and the concerns of companies over escalating trade wars with China and the EU.

The legal challenge came as carmakers said Mr Trump’s plans to impose tariffs on auto imports could raise prices of imported vehicles by as much as $6,000 (€5,165 ) per car and raise prices of locally made vehicles.

John Bozzella, president of Global Automakers, a group that represents foreign carmakers in the US, said the tariff, if imposed against auto parts as well, “will have an impact on every single car and light truck sold in America” because of the use of imported parts to make vehicles produced in the US.

The Alliance of Automobile Manufacturers, which represents domestic and international car companies, has said that buyers of imported vehicles would face an average $5,800 price rise from a 25 per cent tariff.

“Nationwide, this tariff would hit American consumers with a tax of nearly $45 billion, based on 2017 auto sales. Not included in this figure are costs from tariffs on auto components,” the group said. – Copyright The Financial Times Limited 2018