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President Trump using auto tariffs as a “threat” to draw concessions from trading partners

While U.S. President Donald Trump shows little hesitation to prolong the U.S. trade with China, he is interested in reaping results that can appeal to his American supporters in trade talks with other countries. His aim is to use the imposition of auto tariffs as a “threat” to draw concessions from Japan, the European Union and Mexico, which run trade surpluses with the U.S., such as making them lower their tariffs and import more U.S. products.

 

President Trump is playing up his feats that he achieved in a deal with the EU, which agreed in July with the U.S. to launch talks on the lowering of tariffs on industrial products. At a rally held in West Virginia on Aug. 21, he talked to his supporters about a U.S. trade deficit of 150 billion dollars against the EU and proudly noted that “the situation changed dramatically when I signed.” He stressed that his tactic of telling [the EU] that the U.S. would impose auto tariffs proved effective.

 

Before the U.S. Congress holds midterm elections in November, he hopes to win second results from the renegotiation of the North American Free Trade Agreement. The U.S. is currently holding ministerial talks with Mexico and looking to reach a bilateral agreement. An advisor to the Canadian delegation to the NAFTA talks also notes that “we must make concessions to some extent to avoid an auto tariff.”

 

In talks with Japan, the U.S. focuses on a ministerial session on trade and a Japan-U.S. summit, which are expected to be held in September. President Trump has been showing his discontent toward Japan’s trade barriers in the auto and agricultural sectors. It appears that he may use the imposition of auto tariffs as a tool to draw concessions from Japan to some extent.

 

President Trump is making allusions that he will not impose auto tariffs on countries and regions that agreed to make concessions. But there is a risk that he may break his promise and impose tariffs.

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