Today is the deadline for Donald Trump to decide whether to slap tariffs of up to 25% on imported autos on national security grounds.
The president is expected to delay the decision for six months while threatening to slap the tariffs on Japan and the EU if they do not restrict auto exports to the US within that time. With Washington currently discussing trade agreements with Japan and the EU, today’s move is likely a negotiating tactic.
While both the EU and especially Japan would be sorely hurt by the tariffs—the US makes up 29% and 40% of their auto export market, respectively—both still have some leverage. For one, ahead of an election next year, Trump needs something to show voters after campaigning heavily on reducing the US’s trade deficits. Auto tariffs would also hurt US consumers, potentially adding some $2000 to the cost of cars built in the US and up to $7000 on imported vehicles.
EU parliamentary elections this month and a July upper house election in Japan will delay negotiations on both fronts in the short-term. This will leave little time for Washington to hash out agreements before Trump’s deadline, although the president may delay his decision again to avoid derailing talks.
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Alex is a senior analyst in the Current Developments team with a primary focus on the Americas. He also serves as an editor on The Daily Brief.