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Pressure on NAFTA talks to hit deadlines

Automotive News  /  August 7, 2017

WASHINGTON — Two decades into a treaty that ignited fierce passions and rhetoric on the 2016 campaign trail, negotiations will begin this month between the U.S., Canada and Mexico to rewrite the North American Free Trade Agreement (NAFTA), with potentially huge ramifications for the auto industry.

Trade negotiations usually take years of detailed work to hash out agreements covering multiple industries and products. In this case, the three governments will race to finalize a deal before other events complicate matters.

Details about the structure of the talks have been limited so far. Automotive News got a sense of how the process will unfold, and how external factors might influence the negotiation timetable, from trade experts who based their comments on experience with previous agreements and conversations with officials participating in the coming talks.

The initial session, Aug. 16-20, will be a feeling-out process, with Canadian and Mexican officials mostly in listening mode and discussions focused on establishing procedures for subsequent rounds. It will be closed to outside stakeholders.

The U.S. Trade Representative's office announced that John Melle, a 29-year veteran of the office who heads Western Hemisphere trade policy, will serve as chief negotiator. He will manage day-to-day negotiations conducted by technical leads for each subject area. Personnel assigned to each chapter of the agreement, such as rules of origin for goods that receive tariff-free treatment, will work through text line by line with the assistance of subject-matter experts from other agencies, such as the Commerce Department's International Trade Administration for the auto sector.

Mexico's lead negotiator is Kenneth Smith, a Ministry of Economy representative who runs the Mexican Embassy's NAFTA section in Washington, according to Antonio Ortiz-Mena, a senior adviser with the Albright Stonebridge Group and a former head of economic affairs at the embassy.

According to Canadian media reports, Steve Verheul, who led negotiations for Canada during its trade talks with the European Union, is expected to lead the NAFTA negotiations. The federal government has also put together a 13-member NAFTA advisory council that includes Linamar CEO Linda Hasenfratz.

All issues will be on the table at each session, with parallel negotiations taking place, said Les Glick, an international trade and customs attorney with the law firm Butzel Long. This format creates the opportunity for trade-offs in different subject areas, said Eric Miller, president of Rideau Potomac Strategy Group and a former vice president at the Canadian Council of Chief Executives.

Mexican officials are keen to quickly conclude talks so their legislature can ratify an agreement before the Mexican presidential campaign season kicks into gear.

President Enrique Peña Nieto will become a lame duck in the spring as the July election nears, which will make it more difficult for the government to implement any NAFTA concessions, said Scott Miller, a senior adviser on international business at the Center for Strategic and International Studies. If the talks don't end by mid-February 2018, they couldn't restart until January 2019, after the new Mexican president takes office, he added.

Eric Miller, who visited Mexico in June and met with advisers for leftist candidate Andrés Manuel López Obrador, said NAFTA appears to have receded as a top campaign issue and that López Obrador is generally supportive of NAFTA if certain modifications can be made.

But anti-American, nationalist sentiment could reignite if the U.S. pushes Mexico too hard for concessions, or if President Donald Trump again makes disparaging comments about Mexico or talks about a border wall, Doreen Edelman, a trade attorney at Baker Donelson, said.

Driving the schedule on the U.S. side is the July expiration of Trade Promotion Authority, which gives the president authority to conduct negotiations on a fast track and then bring the pact to Congress for a straight up-or-down vote. Any extension of the authority would have to be approved by Congress, which is questionable given free-trade skepticism in the electoral bases of both parties.

Experts question whether the ambitious negotiating schedule can be achieved, but former Obama administration deputy trade representative Robert Holleyman and Ortiz-Mena were cautiously optimistic.

"The U.S., Canada and Mexico largely concluded a NAFTA renegotiation through the conclusion in 2015 of the Trans-Pacific Partnership," Holleyman said, referring to the pact advanced by the Bush and Obama administrations and ultimately scuttled by Trump. "If you look at U.S. negotiating objectives, many of them track things concluded in TPP. So they are beginning with a high level of knowledge of each other's markets and understand where they can reach agreements."

Deep benches of seasoned negotiators on all sides, the absence of negotiations over duties or quotas, and the fact that Mexico's industry and government have been coordinating their position for months also augur well for a fast conclusion, Ortiz-Mena said.

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Profit-rich trucks may catch break in Trump auto review

Bloomberg  /  August 15, 2017

WASHINGTON -- A move under consideration by the Trump administration could ease tough fuel-efficiency standards set to take effect in 2021 on pickups, SUVs and other light trucks, the bulwark of U.S. auto industry sales and profits.

For the 2021 model year, light trucks must average roughly 33 mpg to comply with the current standards, a gain of more than 6 percent from the 2020 model year according to estimates from the National Highway Traffic Safety Administration. That's triple the pace of any annual gain for trucks starting in the 2017 model year, the first year of the current standards, which were finalized in 2012.

President Donald Trump hasn't proposed any changes to the standards yet. But in recent weeks, both NHTSA and the EPA signaled a new willingness to alter the rules earlier than originally planned. The EPA formally asked for public comment on whether its 2021 standards are appropriate and NHTSA said it may review the year in an upcoming rulemaking.

"The domestic Big Three are the big winners, and Fiat Chrysler is arguably the most advantaged" if Trump freezes the standards, said Gopal Duleep, president of H-D Systems, a Washington, D.C.-based research company.

General Motors, Ford Motor Co. and Fiat Chrysler Automobiles (FCA) derive more than three-quarters of their U.S. sales from light trucks. Even Toyota Motor Corp., which has car and truck sales more closely balanced, would catch a break. For the 2016 model year, Toyota forecasts that its light truck fleet may fall nearly 9 percent below the government's fuel economy target, according to figures released by NHTSA.

Any short-term regulatory relief could handcuff automakers if it allows them to fall behind in a global race to cut emissions with electric motors that either supplement or replace gasoline engines, said Duleep. But in the short run, automakers are likely to welcome any easing of the regulations, he said.

Automakers have been preparing for the rules since they were announced in 2011, and analysts say they're unlikely to make significant changes even if Trump moved to weaken the rules. Instead, carmakers would see a huge increase in efficiency credits they could use to help them meet stiffer targets in later years, said Dave Cooke, senior vehicles analyst with the Union of Concerned Scientists, an environmental group.

"If their plans are in place and they receive additional credits, it just makes the later years' standards that much easier to meet," Cooke said.

Fiat Chrysler CEO Sergio Marchionne may be bringing out new Ram pickup and Jeep models, but he's not ignoring electrification. He told investors in July that after 2022, half of his Maserati models will be battery powered.

According to the agreement the Obama administration reached with automakers and announced in 2011, much of the efficiency increase -- particularly for trucks -- was to come after 2020 to give automakers time to comply. The delay was seen as a crucial factor in the decision by most automakers to endorse the plan. Ford's F-series pickups alone account for the majority of the company's North American profits.

NHTSA also has said it will study freezing the standards after 2020 model year as a baseline scenario in an environmental review of pending fuel economy requirements for 2022-25. The deliberations come as part of a mid-term review included in the Obama administration's plan to boost fuel economy to a fleet average of more than 50 mpg by 2025.

A freeze or cut after 2020 would make good on Trump's pledge to the CEOs of Detroit's automakers to slash environmental regulations that he made during his first days in office. It would come as GM is cutting shifts at its car assembly plants to avoid excessive inventories, Ford is reviving dormant truck nameplates such as the Bronco and the Ranger and as FCA has already killed its slow-selling Chrysler 200 sedan.

But for now, automakers say they're simply welcoming Trump's reopening of the review after Obama sought to end parts of it during his last days in office, and are not backing a specific set of revisions.

"Global automakers has only asked that the mid-term review be conducted in a transparent and deliberate process, based on the facts," said Lauren Boland, communications manager for the trade group, which includes Toyota and Honda Motor Co.

The trade group has not asked to put the already-final 2021 rules under review. Nor has the Alliance of Automobile Manufacturers, which represents GM, Ford, FCA and others, according to spokeswoman Gloria Bergquist.

"Let the facts come in and let the evidence dictate a decision next spring that optimizes our nation's environmental and economic objectives, consistent with affordability," she said in an email.

The EPA plans to determine whether the tailpipe standards for 2021 need to change by next April. That ruling could carry another risk for automakers: driving a wedge between California and Washington regulators, who've been coordinating their rules since 2011 to allow the companies to sell the same vehicles in all 50 states.

California has already said it has no plans to change its 2025 emissions targets, which are followed by several other states that combined account for around 30 percent of U.S. auto sales.

"It was very difficult to get a national standard in the first place," said Stephanie Brinley, senior automotive analyst at IHS Markit. "It's best for the country to have a common standard."

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White House proposes weaker auto emissions rules, overriding California

Eric Kulisch, Automotive News  /  August 2, 2018

WASHINGTON -- The Trump administration on Thursday proposed capping federal fuel efficiency requirements for passenger vehicles at the 2020 model year level of 35 mpg, instead of letting them continue to rise through 2025 to about 50 mpg as planned under the Obama administration.

The notice of proposed rulemaking also declared that the 1975 law that established fuel efficiency standards pre-empts California from setting its own carbon emission standards for vehicles and that a waiver from federal rules allowing it to set stricter standards on its own should be revoked -- setting up a likely court clash.

The draft rule, jointly written by the EPA and NHTSA, includes a range of options for modifying the fleet fuel economy and emissions standards, but makes clear the preference is to freeze the standards at the 2020 model year level.

The new plan, if adopted in a final rule after a public comment period, would dramatically weaken President Barack Obama’s most far-reaching policy intended to reduce greenhouse gas emissions that contribute to climate change.

The Thursday move, widely anticipated, was quickly criticized by environmentalists and lawmakers from several states. California Gov. Jerry Brown said his state "will fight this stupidity in every conceivable way possible."

Trump embraces automakers

The effort began early last year after President Donald Trump embraced automakers’ appeals to relax the aggressive standards and make compliance more manageable. In the spring, former EPA Administrator Scott Pruitt determined that the Obama administration’s five-year re-evaluation of whether the 2021-25 model year standards were still feasible was faulty and ordered a new review.

Under existing rules, standards vary by model based on a size footprint. A Honda Fit, for example, would need to get 62 mpg by the 2025 model year, while a Chevy Silverado would comply with 35 mpg.

Automakers got more than they bargained for when Pruitt, a self-professed “small-government” champion, pushed for a significant rollback of the fuel economy standards and revoking California’s waiver. There are differences among the major companies over how much the phased-in standards to which they agreed in 2012 should be watered down.

But the consensus is for rules that California can accept so that the state, and a dozen others that follow its program, continue to participate in a harmonized national program. Without a unified program, automakers face the expensive prospect of building and marketing vehicles for two markets or losing sales of some models in certain states.

"We applaud the president and the administration for releasing this much anticipated proposal that includes a variety of standards for public consideration," the Alliance of Automobile Manufacturers and the Association of Global Automakers said in a statement. "Automakers support continued improvements in fuel economy and flexibilities that incentivize advanced technologies while balancing priorities like affordability, safety, jobs, and the environment.

"With today’s release of the Administration’s proposals, it’s time for substantive negotiations to begin."

'Common sense solution'

The statement urged California and the federal government "to find a common sense solution that sets continued increases in vehicle efficiency standards while also meeting the needs of America’s drivers.”

Pruitt did not see the proposed rulemaking to its conclusion, having resigned last month under pressure for a series of ethical and management lapses that brought negative attention on the White House. Acting Administrator Andrew Wheeler, a former fossil fuel and coal industry lobbyist who once worked for climate-change denier Sen. James Inhofe, R-Okla., reportedly worried that the proposal was legally and technically weak, making it vulnerable to rejection in court.

At a Senate hearing Wednesday he encouraged the auto industry and California to find a compromise that would enable continuation of a single national program.

The draft rule contends that the existing rules are too costly and would lead to production of lighter cars, resulting in about 12,000 more traffic fatalities over a dozen years, primarily because vehicles will be cheaper and encourage consumers to replace their older vehicles and buy newer, safer cars. Consumers may delay or forgo the acquisition of safer vehicles as a result of higher prices associated with clean car and safety technologies, the rulemaking says.

More consumption

The freeze would increase U.S. oil consumption by about 500,000 barrels of oil per day by the 2030s. It also argues that people will drive less with cars that burn more fuel, further protecting them from potential accidents.

Critics say the administration based its decision on ideology, with thin data to justify weakening the emissions rules, compared with the voluminous scientific record developed by the Obama EPA.

California and its allies previously threatened to sue the federal government if the corporate average fuel economy rules are rolled back. Protracted litigation is likely over the stringency of the fuel economy rules, a determination that California is pre-empted by the Environmental Protection and Conservation Act from regulating carbon emissions from autos and moves to revoke California’s waiver from federal standards, according to stakeholders and experts.

Fifty-one House Democrats last week signed onto a resolution supporting the clean car standards and defending state authority under the Clean Air Act to protect their citizens from harmful air pollution. Senate Democrats have also criticized the administration's decision.

The government said it will hold three public hearings in Washington, Detroit and Los Angeles to gather input on the proposals, with dates to be determined.

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U.S., Mexico reach deal on auto portions of NAFTA

Reuters/Bloomberg  /  August 27, 2018

Under the tentative agreement, automakers would be required to manufacture at least 75 percent of a light vehicle’s value in North America under the new rules -- up from 62.5 percent -- in order to qualify for zero tariffs.

Automakers will also be required to use more local steel, aluminum and auto parts, and have a certain proportion of the vehicle made by workers earning at least $16 an hour.

The White House said Trump will make a trade announcement at 11 a.m. Monday Eastern Time. 

There is no deal reached yet with Canada.

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12 hours ago, Maxidyne said:

Looks like Mexico is the winner in this deal.

Yes sir. The face of US government tells the masses all about how the US came out ahead, as Clinton did with NAFTA 1.0, and most shrug and believe it.

All US market cars, aside from low volume niche models, should be produced in the US. I say that, because as the world's no.2 new car market by size, we can demand it.

But the world's auto and truckmakers don't want that, and big business runs the world (e.g. how NAFTA came to be).

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I've been around the biz long enough to remember when Toyota "assembled" pickups near the west coast docks where they came in, and "assembly" pretty much consisted of dropping the box on the frame and bolting it down. That was probably the most expensive pickup box in history, but the ruse allowed Toyota to claim the pickups were "American made" and get around the 25% "Chicken Tax". Ford has been pulling a similar ruse with the Spanish built Transit Connect van, putting cheap seats in the back to get around the "Chicken Tax", pulling them out at the ports upon arrival, and even shipping them back to Spain for another trip!

It's pretty obvious Trump has a hard spot in his heart for Euro cars, and he's itchin' to hit them with a hefty tariff... All BMW, Daimler, FCA, Volvo cars, VW Group etc. have to do is source more of their Euro built cars from their U.S. and Mexican plants, overvalue them like Toyota did, and they'll slip their BMW cars, Mercedes cars, Alfas, S90s, and Audis right past Trump's tariffs!

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Trump: EU offer to drop auto tariffs is 'not good enough'

John Micklethwait, Margaret Talev and Jennifer Jacobs, Automotive News Europe  /  August 30, 2018

WASHINGTON -- President Donald Trump rejected a European Union offer to scrap tariffs on cars, likening the bloc's trade policies to those of China.

"It’s not good enough," Trump said of the offer from Brussels during an Oval Office interview with Bloomberg News. "Their consumer habits are to buy their cars, not to buy our cars."

Trump's comments come just hours after Trade Commissioner Cecilia Malmstrom told European Parliament lawmakers that the EU would be "willing to bring down even our car tariffs to zero, all tariffs to zero, if the U.S. does the same."

Autos were previously excluded from the discussions that focused on manufactured products bought and sold between the two markets.

Trump compared the EU to China, where the president is engaged in another escalating trade war.

"The European Union is almost as bad as China, just smaller," Trump said.

Last month, the U.S. and EU agreed not to impose new tariffs on each other after Trump and European Commission President Jean-Claude Juncker met at the White House. The two sides agreed to open discussions about a trade agreement on industrial goods but at U.S. insistence left out cars. Trump has set achieving zero tariffs, zero subsidies and zero non-tariff barriers for industrial goods as part of those talks.

European leaders and the continent's auto industry have been offering to drop the EU's 10 percent tariff on passenger vehicles, a persistent target of Trump's complaints. He has used the gap between that EU duty and the U.S.'s own 2.5 percent tariff on passenger cars to justify his plan to impose an import tax of as much as 25 percent on imported cars and parts.

But that complaint ignores the much higher 25 percent tariff the U.S. applies on light trucks, the most profitable segment for the U.S. auto industry.

Eliminating tariffs on U.S. auto imports would do little for General Motors and Ford, but would lend a major boost to Germany's BMW and Daimler. SUVs built by the German carmakers in the American South dominate the models exported to Europe from the U.S.

BMW for example is projected to sell nearly 70,000 X3 SUVs in Europe made in its South Carolina factory this year, according to data from LMC Automotive. Compare that to roughly 15,000 units of Tesla's Model S sedan, which LMC, an industry data consultancy, projects will be the top-selling model in Europe assembled in the U.S. by an American automaker.

Trump has ordered his Commerce Department to investigate whether car imports imperil national security, under the same provision he invoked to impose global tariffs on steel and aluminum earlier this year.

The findings of the auto study are due by February, though the president could decide to act before then. This week, Trump threatened Canada with auto tariffs if the country failed to join his trade deal with Mexico to replace NAFTA.

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With NAFTA redo, Trump claims victory for hardball trade tactics

Eric Kulisch, Automotive News  /  October 1, 2018

WASHINGTON -- President Donald Trump on Monday touted a new North American trade agreement as not only a victory for U.S. companies and workers, but also validation of an aggressive policy approach built on threatening trading partners with tariffs to exact concessions.

Recent tariffs on steel and aluminum imports -- as well as the threat of tariffs on autos and higher duties on all goods if the U.S. exercised its right to terminate NAFTA -- got Canada's and Mexico's attention, forcing them to make concessions, Trump said in a televised address from the White House's Rose Garden to promote the new U.S.-Mexico-Canada Agreement.

The replacement for NAFTA would raise the threshold for regional content in autos crossing North American borders duty-free and add stricter labor standards in the auto trade, including a minimum wage for some products. Canada, which has long supported the labor provisions as a way to defend against the flight of factory jobs, agreed to open up its market further to U.S. dairy products.

"Without tariffs we wouldn't be talking about a deal," the president said, comparing lawmakers and others who feared tariffs would backfire to "babies" lacking the stomach to confront trading partners that don't provide reciprocal market access to U.S. exports.

Trump said tariffs also provide negotiating leverage in other trade disputes.

"Because of the power of tariffs, in many cases, we won't even have to use them," he said. "And in many cases, countries that are charging massive tariffs are eliminating them."

In the past two months, he said, the European Union, Japan and India have reached out to the U.S. to start negotiations designed to address their respective trade surpluses with the U.S.

Japan talks

Last week, the U.S. and Japan announced the start of trade talks. Trump claimed Japan had refused to talk about opening its market to U.S. goods until he threatened a "very substantial tax" on Japanese auto imports, although Japan had negotiated with the U.S. on the multilateral Trans-Pacific Partnership agreement before Trump withdrew from the deal upon taking office.

The European Union, Trump said, was unwilling to loosen protections on domestic markets until "I said we're going to put a tax of 20 percent on all the millions of Mercedes and BMWs that they sell here."

Trump recently suggested tariffs on the EU should be imposed even if regulatory barriers fall away because Europeans don't have a cultural affinity for American brands. "Billions and billions" of dollars would flow into U.S. coffers, he said.

Steel tariffs not lifted

The U.S. did not lift steel tariffs on Canada and Mexico as part of the new trilateral deal, but Trump and U.S. Trade Representative Robert Lighthizer said talks are underway on a compromise that could involve replacing tariffs with quotas.

The 25 percent tariffs on imported steel have significantly added to production costs for automakers as the price of steel from all sources has surged more than 30 percent.

"We are not going to allow our steel industry to disappear," Trump said. "It was almost gone. I don't want plants closing." U.S. Steel, Nucor and other domestic producers have announced plant expansions this year.

"They're hiring thousands of workers. I'm not giving that up," the president said.

Other tariffs

The Trump administration is studying the possibility of imposing wholesale tariffs of up to 25 percent on imported autos and auto parts on the grounds of a potential national security threat they pose and the need to protect a domestic auto manufacturing base. Japan and the EU are under a moratorium from any potential tariffs while trade talks continue, but the White House has made clear they could be imposed if its conditions aren't met.

German automakers exported 657,000 vehicles to North America last year, with total exports of vehicle components, cars, engines, as well as secondhand vehicles totaling $36.4 billion in 2016, according to the German auto industry association VDA. U.S. Commerce Department figures show the U.S. imported 1.16 million new vehicles from the European Union in 2017, of which 491,587 were from Germany. On a dollar basis, the U.S. imported $42.8 billion worth of vehicles from the EU, while the value of exports to the region was $8.6 billion.

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This isn’t a revolutionary deal. It’s a modification of a deal already in place,” said Eric Winograd, senior U.S. economist at AllianceBernstein, an investment and research firm. “The total economic impact will be very small. I do not expect it to boost the U.S. economy.”

We see this rebranded NAFTA agreement as a marketing exercise,” said Chris Rupkey, chief financial economist at MUFG Union Bank. “The harsh war of words from Trump’s economics team terrified markets, consumers and businesses for a time, but what the U.S. actually got was much more modest than what the angry war of words seemingly demanded.”

Lorenzo Caliendo, an economics professor at Yale University’s School of Management who co-authored a NAFTA study published in 2015 that concluded each American had gained about $45 a year from that treaty, said the new agreement would “clearly not” return significant numbers of manufacturing jobs to the United States.

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Trump tells GM to put 'something else' in Ohio

Reuters, Bloomberg & Automotive News  /  November 26, 2018

WASHINGTON -- U.S. President Donald Trump told The Wall Street Journal on Monday that General Motors should stop making cars in China and make them in the United States instead.

GM said on Monday it would cut thousands from its North American workforce, slash production and eliminate some slow-selling car models.

Trump told reporters he was not happy with GM's decision to idle the Chevy Cruze assembly plant in Lordstown, Ohio, and that GM had "better put something else" in Ohio.

“You better get back in there soon -- that’s Ohio,” Trump told reporters Monday, recounting what he said to GM CEO Mary Barra following the job cuts announcement earlier Monday. The automaker said it planned to lay off 14,000 workers and close seven factories.

“I was very tough. I spoke with her,” Trump said as he departed the White House for campaign rallies in Mississippi. “We have a lot of pressure on them.”

Ohio is a crucial swing state politically and played a key role in Trump's 2016 victory. He will need to keep his support strong in Ohio for the 2020 election. 

Barra reportedly told Trump the decision to halt sales of the Chevrolet Cruze had "nothing to do with tariffs" but was because of poor sales.

"Get a car that is selling well and put it back in," Trump said.

Barra also was expected to meet with Trump's economic adviser Larry Kudlow at the White House on Monday, according to CNBC

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Apparently  Trump has not caught up with Hackett's proclamation.  "Cars are dead"....Unless of course they are built by Kia,  Hyundai,  Honda,  Toyota, Subaru,  BMW, Volvo,  etc .  Its only a matter of time before the management of these companies wake up to the fact they are losing their ass!

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Trump renews auto tariff threat as trade czar aims at China

Ryan Beene & Shawn Donnan, Bloomberg  /  November 28, 2018

WASHINGTON -- President Donald Trump raised the prospect of slapping a 25 percent tariff on imported cars and ordered a review of China’s retaliatory auto tariffs against the U.S. as his administration scrambled to respond to General Motors' announcement of plant closures this week.

In a pair of Twitter posts on Wednesday, Trump pointed to a longstanding U.S. tariff on imported pickup trucks that has helped U.S.-based automakers dominate that market. He argued that a similar import tax on cars would have prevented GM’s move to close plants in the U.S.

“The reason that the small truck business in the U.S. is such a go-to favorite is that, for many years, tariffs of 25% have been put on small trucks coming into our country. It is called the ‘chicken tax,”’ Trump said on Twitter Wednesday.

A 25 percent duty on imported light trucks was applied in the 1960s by President Lyndon Johnson in retaliation to West German tariffs on U.S. poultry. Other products were included in those American levies initially but have since been eliminated. The pickup tariff, which also applies to work vans, has remained and has been a major contributor to U.S.-automaker dominance in the domestic pickup market.

More cars would be assembled in the U.S. if the same tariff were applied on imported autos, Trump said, adding in a second tweet that “G.M. would not be closing their plants in Ohio, Michigan & Maryland.”

Later in the day U.S. Trade Representative Robert Lighthizer announced that Trump had ordered a separate review of China’s 40 percent tariff on auto imports from the U.S., 25 percentage points of which is the result of Chinese retaliation against Trump’s own tariffs on imports from China. The U.S. currently charges a 27.5 percent tax on imported cars from China.

“As the president has repeatedly noted, China’s aggressive, state-directed industrial policies are causing severe harm to U.S. workers and manufacturers,” Lighthizer said. “China’s policies are especially egregious with respect to automobile tariffs.”

Lighthizer said Trump had directed him to "examine all available tools to equalize the tariffs applied to automobiles.”

Summit meeting

The move comes just days before Trump is due to sit down for dinner with China’s Xi Jinping on the sidelines of a Group of 20 summit in Buenos Aires and some analysts said it appeared to be related to that. The U.S. had a trade surplus in cars with China last year. According to Kristin Dziczek of the Center for Automotive Research, the U.S. exported around 260,000 light vehicles to China in 2017 and imported about 60,000.

China said Thursday that tariffs on U.S. autos would be 15 percent if not for the trade dispute, and it called for a negotiated solution.

“Speaking to the media frequently or waving the big stick of tariffs is not helping,” foreign ministry spokesman Geng Shuang said when asked about Lighthizer’s comments.

But it also comes as Trump is pondering broader actions on cars that threaten to hit key allies in the European Union and Japan.

Trump’s administration is mulling whether to apply fresh tariffs on imported autos under national-security grounds, as it did on steel and aluminum imports this year. The main targets of such a move would be cars from the EU, Japan and South Korea.

Some administration officials have been arguing that hitting allies such as the EU and Japan with tariffs at the same time as Trump is soliciting their help in taking on China would be counter-productive. The EU and Japan, in particular, have also drawn promises from Trump that he would not proceed with the auto tariffs as long as they are engaged in trade negotiations that are due to get underway in earnest early next year.


Meanwhile, Canada and Mexico, two other major sources of U.S. auto imports, are set to be exempted from any tariffs as a result of the new version of the North American Free Trade Agreement negotiated by Trump.

Administration officials have been putting the final touches on a report laying out the conclusions of a Commerce Department study of auto imports that has to be presented to Trump by February. Once the report is submitted formally to him, Trump would have 90 days to take action.

Automakers, dealers and suppliers have come out against any new tariffs, arguing that they would hurt even U.S.-based companies and the U.S.’s international competitiveness. GM, which attributed its move this week to changing consumer tastes and declining sales, has said that the tariffs on steel and aluminum had already cost it $1 billion in profits.

Economists are also worried about the broader consequences for what would be a major escalation in Trump’s trade wars. U.S. imports of new passenger vehicles and parts were worth more than $340 billion last year.

The International Monetary Fund warned on Wednesday that the auto tariffs represented a major risk to the global economy. If the U.S. went ahead with auto duties and its trading partners responded in kind, it would take as much as three quarters of a percentage point off of global output, which IMF economists now expect to grow 3.7 percent next year.

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Trump says GM shift to electric vehicles is 'not going to work'

David Shepardson & Lisa Lambert, Reuters  /  December 13, 2018

WASHINGTON - President Donald Trump on Thursday said the decision of General Motors to shift much of its focus to electric vehicles will not succeed, and he asserted a new trade deal will make it harder for the company to move work to other countries.

Last year, GM said it planned to launch 20 new electric vehicles by 2023 as it faces rising regulatory requirements for zero-emission vehicles in China and elsewhere.

GM has come under enormous criticism in Washington after it announced plans to close four plants in the United States and cut up to 15,000 jobs in North America.

Trump questioned GM CEO Mary Barra’s business strategy in an interview with Fox News.

“They’ve changed the whole model of General Motors. They’ve gone to all-electric. All-electric is not going to work ... It’s wonderful to have it as a percentage of your cars, but going into this model that she’s doing I think is a mistake,” Trump said.

Barra was on Capitol Hill for two days of meetings last week to discuss the company’s decision with angry lawmakers from states where plants are closing. “To tell me a couple weeks before Christmas that’s she going to close in Ohio and Michigan - not acceptable to me,” Trump said.

Trump suggested that a new free trade deal with Mexico and Canada makes it “very uncomfortable” for GM to build cars outside the United States.

Trump signed a new trade deal with Mexico and Canada on Nov. 30 to replace the North American Free Trade Agreement (NAFTA), but that deal has not been approved by the U.S. Congress.

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On ‎11‎/‎26‎/‎2018 at 9:01 PM, Red Horse said:

Apparently  Trump has not caught up with Hackett's proclamation.  "Cars are dead"....Unless of course they are built by Kia,  Hyundai,  Honda,  Toyota, Subaru,  BMW, Volvo,  etc .  Its only a matter of time before the management of these companies wake up to the fact they are losing their ass!

I dunno.  My 2010 Toyota Highlander with 135,000 miles on the clock isn't dead yet... 

Just drove it from Dallas, TX to Akron, OH, to Newark, to Atlantic City, to Winchester, VA, to DFW.  3,440 miles round trip in 10 days.  Didn't use a drop of oil and got 25 mpg at speeds of 75- 82 mph fully loaded with cargo + wife + dog.  Only maintenance since brand new has been oil changes, 1 set of brakes, one trans fluid change, and one alternator.  I'd buy a GM vehicle if I thought it would do this, but I'm no longer a believer in GM (or Ford.)

Edited by grayhair

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U.S. lifts tariffs on China-made injection molds

Steve Toloken, Automotive News  /  January 4, 2019

WASHINGTON -- The Trump administration unexpectedly put a hold on steep 25 percent tariffs on injection molds imported from China in late December, a decision analysts say is likely to hurt American mold building companies but help U.S. plastics companies that supply automakers.

The announcement from the U.S. Trade Representative (USTR) means that the 25 percent tariffs on injection molds -- imposed in July as part of the first round of $34 billion in duties on Chinese imports -- will be suspended for at least one year.

USTR did not explain its decision, but one attorney for the mold making industry said it may be a response to a flood of more than 200 requests from plastic injection molding companies, many in the automotive supply chain, to exempt their specific mold imports [from Red China].

The USTR announcement is broader than molds, exempting about 30 different categories of imports from the tariffs. Molds are the largest plastics-related category.

"I believe they have had so many requests from companies seeking  exemptions of molds from the tariff, that the government decided to exclude molds in their entirety rather than spending resources on each individual exemption request for a mold," said H. Alan Rothenbuecher, a lawyer for the Indianapolis-based American Mold Builders Association. "No one knows for sure why, but that is my opinion."

Rothenbuecher, a partner with the Cleveland-based law firm Benesch, Friedlander, Coplan & Aronoff LLP, said the ruling will hurt U.S. mold builders but help U.S. plastics companies that buy molds.

"There was and is strong support among the [U.S.] mold builder community for these tariffs," Rothenbuecher wrote in an email.

Plastics processors, however, said [whined] the higher costs from the 25 percent tariffs would be hard for them to absorb, causing significant problems in their already price-sensitive businesses [can't have your cake and eat it too].

Auto suppliers impacted

Many argued to USTR that since mold purchasing takes months and the contracts for these molds were signed before the tariff details were discussed, they could not plan for the 25 percent tariffs.

Plastikon Industries Inc., for example, asked for what it called a "one-time exclusion" for molds ordered from China in late 2017 for a project for a U.S. automaker.

"Due to the timing, significant size and technical requirements for the U.S. vehicle launch, however, the company cannot re-source the items of concern to a U.S. supplier," the company said.

It said [whined] a 25 percent tariff would "impart significant economic hardship," possibly forcing it to cancel the multiyear contract with the automaker and risking the jobs of 600 workers at one of its plants in Kentucky.

Other companies, including plastics housewares maker Keter U.S. Inc., made similar points, arguing that higher tooling costs would make its U.S. manufacturing less competitive and risk jobs.

Plastikon said it had taken steps to source more molds in the United States.

"We fully support the strategic objectives of shifting manufacturing to the U.S. and have already taken steps to source future molds from the U.S. and from fair trade countries," Plastikon told the USTR.

Automotive reaction

More than half of the requests for tariff exemptions came from injection molding companies in the automotive supply chain and argued that the tariffs would raise costs or slow down vehicle development.

[Chinese-owned] Yanfeng U.S. Automotive Interior Systems LLC, for example, submitted more than 80 requests. Forteq North America Inc. submitted more than 20, and International Automotive Components Group North America Inc. and Faurecia U.S. Holdings each requested more than 10 mold tariff exemptions.

IAC -- which was founded by Trump's Commerce Secretary Wilbur Ross -- noted that its Chinese mold supplier is chosen directly by its customer, Ford Motor Co. IAC added that the U.S. mold making industry did not have capacity to meet its needs. 

The Center for Automotive Research in Ann Arbor, Mich., said lifting the tariffs will help hold down U.S. car prices but hurt mold makers who supply the industry.

"It's good for autos; it's bad for domestic mold builders," said Kristin Dziczek, CAR's vice president of industry, labor and economics. "The mold industry in the U.S. is no better, no worse off than they were, but the protection from Chinese molds would have been beneficial."

While the automotive injection molding sector was vocal in complaining that tariffs would bite them, the U.S. mold making industry has clearly faced its own worsening trade picture in recent years.

The U.S. trade deficit in molds shot up from $1.14 billion in 2015 to $1.53 billion in 2017, the last full year figures are available, according to a recent report from the Washington-based Plastics Industry Association, which said the U.S. imports 3.5 times as many molds as it exports.

The mold trade deficit with China rose from $390 million to $498 million in those three years.

But industry trade data also suggests Canada may be the bigger challenger to the U.S. industry's trade picture.
U.S. mold makers consistently have their largest trade deficits with Canada. It reached $884 million in 2017, and that rose from $690 million in 2015, according to the association's report.

AMBA Executive Director Troy Nix said survey data collected from processors is now showing a trend toward more sourcing of molds in the United States. Nix added that the industry will be watching to see if eliminating tariffs on Chinese molds would slow or reverse that.

Rothenbuecher said getting rid of the tariffs on Chinese molds will "plain and simple" hurt U.S. mold builders, but he also said the U.S. government may have been concerned about signs of overcapacity in the American mold making sector.

Reaching capacity

"It has been reported that the U.S. mold building industry may be or is at overcapacity with the amount of work that has been directed back to United States mold builders," Rothenbuecher said. "That consideration may have played into why molds are now being exempted from the tariff."

Several U.S. injection molding companies argued that lead times are being stretched out for U.S.-built molds because the industry is at capacity.

Mack Molding Co., for example, said in its filing that it goes overseas when U.S. capacity is tight: "Due to the more recent robust economy, many of the domestic mold shops have had a workload that prohibits us from getting fast deliveries on tooling to support our customers, so we have the tooling built in China and fly the molds back to the U.S."

As well, custom injection molder Sajar Plastics told USTR it faces long lead times for tooling in the U.S. and is currently having 28 molds built in China.

"U.S. tool shops typically take 18-20 weeks for each tool build," Sajar wrote. "Many of the tools we currently have in China are ready to ship within the next four weeks and be in production in the next 10 weeks."

USTR said that the tariff exclusions would be retroactive to the original July 6 tariff announcement and would run until Dec. 28, 2019, one year past the official publication of the exclusions in the Federal Register.

What happens after that is not clear, but some industry observers said they could be extended.

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