Washington, Feb. 17 (Jiji Press) — The U.S. Department of Commerce on Sunday submitted to President Donald Trump a report on whether increased imports of automobiles and auto parts amount to a threat to national security.
Trump will determine within 90 days whether to impose extra tariffs on such imports. The department will not disclose the report on the result of its investigation under Section 232 of the Trade Expansion Act of 1962.
The United States is expected to step up pressure on Japan and the European Union with the threat of possible tariff hikes, in its trade talks with them set to shift into gear.
Last year, Trump made clear in his summits with Japan and the EU that Washington will not impose extra tariffs on imported vehicles while the talks remain under way.
It is likely, however, that Washington will urge Tokyo and Brussels to accept caps on their automotive exports to the United States and other nontariff measures.
According to U.S. industry bodies and sources in the auto sector, the department is believed to have proposed several measures to restrict imports, including tariffs of 20 to 25 pct, import caps and restrictions focusing on advanced technologies such as self-driving cars and electric vehicles.
Japanese automakers are increasing local production. But their sales would still likely be negatively affected if additional tariffs are launched.
In 2018, Toyota Motor Corp. <7203> sold 2.42 million new vehicles in the United States. Of the total, 1.67 million units, or 69 pct, were produced in North America while the rest were imported from Japan and elsewhere.
Even in the United States, Toyota relies on imported parts to produce vehicles. Higher tariffs would therefore increase the production cost for its popular Camry sedan by 1,800 dollars a unit.
Among Japanese companies, Mazda Motor Corp. <7261> would be hit particularly hard, as it does not have a plant in the United States. Most of the 300,000 new vehicles it sells here annually are shipped from Japan.
Mazda is building a plant with Toyota in Alabama, with its operations slated to start in 2021. Mazda would be in trouble if extra tariffs come earlier than that.