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Editorial: Will the U.S. commit another reckless action?

Is the U.S. once again trying to distort global trade by using national security as an excuse? This reckless action should not be allowed.

 

U.S. President Donald Trump instructed Secretary of Commerce Wilbur Ross to examine if U.S.-bound shipments of cars and auto parts jeopardize national security. He eyes a drastic increase in auto tariffs. It was reported that he is mulling raising the tariff on passenger vehicles up to 25% from the current 2.5%.

 

If the rate is increased, Japan, South Korea and Germany, the main exporters of U.S.-bound vehicles, will take a direct hit and the global economy will be impacted significantly.

 

The latest examination will be conducted on the basis of Section 232 of the Trade Expansion Act, which allows invoking import restrictions for national security. In March, the Trump administration used the same section to impose higher tariffs on steel and aluminum products.

 

The World Trade Organization, which bans unilateral import restrictions, acknowledges exemptions for security. But these are limited to emergency situations, such as war. The last time the U.S. implemented import restrictions was on Libyan oil in 1982. And it has not taken this action since then. Thus imposing import restrictions is unusual.  

 

Slightly less than 20% of cars produced in Japan are shipped to the U.S. Japanese automakers have production bases in Mexico and Canada, signatories, along with the U.S., to the North American Free Trade Agreement. Raising the U.S. auto tariff could disrupt trans-Pacific supply chains for cars. 

 

About 40% of cars sold in the U.S. are imported. Thus higher tariffs would deal a serious blow to American consumers as well. Opposition against the high tariff plan is also growing within the U.S. It remains to be seen whether the Trump administration will raise the tariff, but it is clear that Washington wants to get an edge in negotiating trade deals with various countries.

 

The U.S. exempts Mexico and Canada, with which it is renegotiating NAFTA, from the steel and aluminum import restrictions through the end of May in an attempt to draw concessions from them. As for autos, it will pressure them with the launch of fresh examinations to win further concessions.

 

Japan will start fresh trade talks with the U.S. in June. The U.S. may demand the launch of bilateral free trade agreement talks on the spot.

 

Japan informed the WTO that it may implement rule-based countermeasures against the U.S. It should act firmly and urge the U.S. to follow international rules.

 

Japan must work closely with countries from Europe and Asia, including South Korea, as well as Canada and Mexico, which share common interests, and make tenacious efforts to persuade the U.S.

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