The United States may not need to impose tariffs on imported vehicles later this month after holding “good conversations” with automakers in the European Union, Japan and Korea, US Commerce Secretary Wilbur Ross said in an interview published on Sunday.
The United States must decide by Nov. 14 whether to impose threatened US national security tariffs of as much as 25 percent on vehicles and parts. The tariffs have already been delayed once by six months, and trade experts say that could happen again.
Ross told Bloomberg in an interview that the Trump administration hoped to avoid imposing the tariffs after discussing capital investment plans with automakers.
“We have had very good conversations with our European friends, with our Japanese friends, with our Korean friends, and those are the major auto producing sectors,” Ross said.
“Our hope is that the negotiations we have been having with individual companies about their capital investment plans will bear enough fruit that it may not be necessary to put the 232 (tariffs) fully into effect, may not even be necessary to put it partly in effect,” he added.
The United States has already signed trade deals with Japan and South Korea that appeared likely to stave off auto tariffs, but its talks with the EU have been moving forward more slowly.
US President Donald Trump last month said Washington continued to talk with the EU about trade, but aimed to avoid imposing broader tariffs for now.
US Treasury Secretary Steven Mnuchin also lauded increased investment by European carmakers in the United States.
Those remarks have given EU diplomats hope for another reprieve, but they say they remain on guard.
“We’re hopeful that we can avoid the car tariffs for now, but we also know there is a chance the president could change his mind,” said one diplomat, who was not authorized to speak publicly.
Germany’s BMW, the biggest US automotive exporter by value for the past five years, last month said it had warned US officials that intensifying a global trade war could threaten jobs at its plant in Spartanburg, South Carolina, which exports about 70 percent of its production.
Both BMW and Daimler have invested to expand the production capacity of plants in the United States where they build mainly larger sports utility vehicles (SUVs) to keep up with rising demand and because it makes good economic sense.
Volkswagen AG in January pledged to invest $800 million and add 1,000 jobs to build electric vehicles in Chattanooga, Tennessee.
Meanwhile, Ross said Thailand still has time to renegotiate with the United States over a suspension of duty-free preferences on imports of Thai goods before the suspension takes effect in April.
The United States last month suspended duty-free treatment for $1.3 billion worth of Thai imports, including seafood products, under its Generalized System of Preferences (GSP) program, saying Thailand did not afford workers “internationally recognized worker rights”.
The loss of duty-free treatment, which Thailand said would incur duties around $60 million a year for Thai products, has stirred a sense of anti-US sentiment among some in the Southeast Asian country that has been enjoying closer ties with China in recent years.
During a speech about US commitment in Asia, Ross said that he would be remiss if he did not address the GSP issue given its publicity in Thailand.
“There’s still time to renegotiate the underlying issue of workers’ rights,” Ross said, noting the suspension was scheduled to take effect in April.
The value of the affected products accounts for 30 percent of Thai exports under GSP to the United States and around a “trivial” 0.38 percent of total Thai exports, Ross said.
“The GSP issue has been blown way out of proportion,” he said. “It’s no big deal.”
Ross spoke at the Indo-Pacific Business Forum, which is aimed at showcasing US investment in the region and highlighting that its presence matters.
While Washington only sent lower-level delegations to Southeast Asian summits this year without President Donald Trump nor Vice President Mike Pence, raising concerns that it could no longer be relied on as a counterweight to China’s increasing regional might, Ross gave a reassuring message.
“The Trump administration is extremely engaged and fully committed to this region,” Ross said. – Reuters