U.S. Commerce Secretary Wilbur Ross said Thursday that President Donald Trump may opt to place tariffs on automobile imports from Europe and Japan later this week, contradicting multiple media reports that suggested he would delay that decision for six months.
Speaking with Fox Business Ross also said the U.S. was still in discussions with Canada and Mexico with respect to the waving of tariffs on steel and aluminium imports, which are holding up ratification of the President's re-negotiated NAFTA deal.
Ross said Trump has "many options" to choose from with respect to both the metal and auto tariffs, and will make his decision by the Saturday May 18 deadline.
Bloomberg News was the first of multiple media outlets to report a potential delay to the tariffs yesterday, citing U.S. officials, sending the Dow into positive territory and paring declines for the S&P 500.
Trump had been expected to make a decision on the tariffs this weekend, following a report U.S. Commerce Department he received on February 17 that studied whether imported cars and other automotive parts pose a threat to national security under section 232 of the Trade Expansion Act.
Normally, the President would have 90 days to act upon the report, but he also has the ability to delay a decision if he is deemed to be in ongoing trade negotiations with the country or region upon whom the tariffs would apply.
European carmakers had been under pressure from comments made during President Donald Trump's State of the Union Speech to Congress earlier this year, when he urged lawmakers to pass the United States Reciprocal Trade Act, "so that if another country places an unfair tariff on an American product, we can charge them the exact same tariff on the exact same product that they sell to us."
The remarks were seen as a direct broadside to Europe, which applies a 10% levy to U.S.-made cars against the 2.5% level put in place by Washington.
The EU exported around 1.155 million cars to the U.S. market last year, according to the European Automobile Manufacturing Association, with total value of just over €37.3 billion ($41.8 billion). The U.S, in contrast, moved only 267,653 cars in the other direction, a value of just €5.5 billion but still nearly 20% of the sector's entire international export base.
Last year, the President threatened to apply a 20% tariff on all cars coming into the United States from the European Union on the same day that the EU imposed its own retaliatory tariffs on $3.4 billion worth of U.S. goods in response to the Trump administration's levies on non-American steel and aluminium products.
The average EU tariff on U.S. goods imported into the bloc is 3%, according to Export.gov data, although non-EU automobiles are subject to a 29% tariff when brought into the bloc, of which 19% is a value-added tax and 10% is a tariff based on current World Trade Organization (WTO) rules.
Cars imported into the United States from countries that don't have existing pacts with Washington are subject to a 12.5% levy, while pickup trucks are subject to a 25% tariff.
That said, some of the largest production facilities of Europe's biggest carmarkers are located in the United States, with plants in Vance, Al. and Spartanburg, S.C. and Chattanooga, Tn., that assemble around a third of the German cars sold domestically.