Trump announces six-month reprieve on car tariffs

The US is giving the EU, Japan and other countries a six-month window to reduce car imports as an alternative to car tariffs, president Donald Trump said in a statement on Friday.

Mr Trump said he was directed Robert Lighthizer, the US trade representative, to launch negotiations with Tokyo, Brussels, and other trading partners to "adjust" auto imports into the US.

Mr Trump's move came as he said that car imports posed a risk to US national security, publicly describing the results of a lengthy commerce department investigation on the issue that was delivered to the White House in February.

Mr Trump was facing a deadline of Saturday to act on the report, but his decision to open negotiations with the EU, Japan, and others on the national security concerns surrounding autos effectively sets a new deadline six months from now.

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Although this marks a reprieve for officials in Tokyo and Brussels – as well as the global car industry – from the threat of sweeping tariffs, the request for negotiations over restrictions to car imports will raise the pressure on both Japan and the EU to make concessions. Mr Trump did not say what kind of measures he was looking for to rein in automotive imports, but quotas could be one option, as well as voluntary export restraints.

Reluctant

Both the EU and Japan are however reluctant to accept either option, setting the stage for a new showdown in the coming months. Such measures would also risk violating WTO rules.

“I concur in the secretary’s finding that automobiles and certain automobile parts are being imported into the United States in such quantities and under such circumstances as to threaten to impair the national security of the United States, “ Mr Trump said in the statement.

According to the US president’s description of the commerce department investigation, a special focus was placed on the danger of the US losing its competitive edge in advanced technologies in the auto sector.

“In the secretary’s judgment, successful negotiations could allow American-owned automobile producers to achieve long-term economic viability and increase R&D spending to develop cutting-edge technologies that are critical to the defence industry,” he said.