Global car-building nations plot response to Trump auto tariff threats

Canada, the European Union, Japan, Mexico and South Korea will meet in Geneva next week to discuss how to respond to threats by US president Donald Trump to impose tariffs on imports of autos and car parts, officials familiar with the talks said.

The Trump administration has come under heavy criticism from car makers, foreign governments and others as it considers tariffs of up to 25 per cent, a levy critics warn will rise vehicle costs, hurting sales and global industry jobs.

Several auto manufacturing powers have been talking to each other in recent days about their fears and a possible co-ordinated response to Trump’s “Section 232” investigation, which he ordered on May 23rd, into whether auto imports are a threat to US security, sources say.

The investigation could be completed within weeks, although similar ones ordered last year that led to tariffs of 25 per cent on steel and 10 per cent on aluminium took about 10 months. The Commerce Department has 270 days to offer recommendations to the president after such an investigation starts. He then has 90 days to act upon them.

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It was not immediately clear what kind of response the countries could be looking at, although Canada, the EU and Mexico retaliated with their own tariffs after Trump imposed levies on steel and aluminium imports in March. Another option is to fight the US at the World Trade Organisation (WTO).

Deputy ministers will gather in Geneva on July 31st to hear each other’s views, a Canadian official and a Mexican official said.

“The meeting is meant to bring together major auto producing nations so we can discuss our concerns over the US Department of Commerce’s Section 232 investigation of automobiles and parts,” said the Canadian government official.

Mexico's deputy economy minister Juan Carlos Baker will travel to Geneva for "work meetings about several subjects," including meeting WTO chief Roberto Azevedo. The Canadian foreign ministry declined to comment.

Eventual tariffs on autos could hit companies including Korea's Hyundai Motor, Japan's Toyota and Germany's BMW, as well as global factories for US brands General Motors, Ford Motor and Fiat Chrysler.

Trump’s agreement on Wednesday to refrain from imposing car tariffs on the EU in return for reduced trade barriers for US products has helped cool fears of a trade war, but his final decision will not be known until the security investigation is concluded in coming months.

The US automakers lowered their full-year profit forecasts on Wednesday due to the trade frictions, and their stocks fell as investors bet the disputes would hurt margins and sales.

Although hopes of a breakthrough in US-EU trade talks boosted carmakers on Thursday, the planned meetings are a sign that auto-producing nations want to prepare for the worst. – Reuters