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Trump abandons threat of auto tariffs on Canada, saying it was just a ‘negotiating point’

DANIEL DALE, Toronto Star
Oct. 2, 2018

WASHINGTON—U.S. President Donald Trump says he is now free to acknowledge that he had only threatened to impose tariffs on Canadian-made cars “as a negotiating point” in NAFTA talks.

“I’m not using tariffs. I used tariffs to get the deal, because if they weren’t willing to make a deal, as an example, Mexico or Canada, then I would have used tariffs. But we’re not going to need tariffs now, because we were able to make the deal. So we’re not doing tariffs with respect to this, other than we use it as a negotiating point. Now I can say it,” Trump said Monday to Tennessee television station WJHL.

Before the deal was struck, Trump had made no secret of the fact that he was using the threat of auto tariffs to pressure Canada and Mexico into concessions. But his Monday suggestion that he raised the spectre of tariffs primarily as a negotiating tool is noteworthy because the official legal justification for the possible tariffs is “national security.”

At Trump’s direction, the U.S. Commerce Department has launched an investigation into whether U.S. imports of cars, trucks and auto parts are detrimental to the country’s security. He continues to threaten these “national security” auto tariffs, under “Section 232” of a U.S. trade law, on the European Union and other countries.

“Given his statements recently,” said Lawrence Herman, a Canadian trade lawyer, “he’s effectively announced that any future auto tariffs, even with a Commerce Department report, would not be in compliance with Section 232.”

Flavio Volpe, president of Canada’s Automotive Parts Manufacturers’ Association, said Trump’s comments could aid legal challenges against any such tariffs. He said they even make it easier for Canadians to press Trump administration officials to remove the U.S. steel and aluminum tariffs that remain in place.

“The more he says that type of stuff publicly, the stronger he makes potential suits against that government action by affected stakeholders,” Volpe said. “The president says it’s not national security, and the condition of the use of the statute is a national security threat.”

This was the first time Trump had said he did not plan to impose auto tariffs on Canada.

The new deal effectively exempts Canada from potential Trump auto tariffs, though it does not say explicitly that Canada will not be hit. It includes a U.S. promise to not put tariffs on the first 2.6 million Canadian-made cars imported by the U.S. every year. Since the U.S. imports about 1.8 million Canadian-made cars per year at present, the exemption covers all current imports and allows room for growth of more than 40 per cent.

Via: Toronto Star