Trump announces 25% tariff on all autos made outside of U.S.

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U.S. President Donald Trump said he is imposing 25 per cent tariffs on all autos manufactured outside of the United States, including Canada, starting April 2.

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“What we’re going to be doing is a 25 per cent tariff on all cars not made in the United States,” he said, in the Oval Office Wednesday evening. “If they’re made in the United States there is absolutely no tariffs.”

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Trump signed an executive order following the announcement, though it was not immediately released. Trump said collection of tariff revenue would begin on April 3 and a White House official said the tariffs are expected to generate US$100 billion in new annual revenue for the U.S. Treasury.

A fact sheet release by the White House indicate that the tariff would apply to imported passenger vehicles and light trucks, “as well as key automobile parts (engines, transmissions, powertrain parts, and electrical components), with processes to expand tariffs on additional parts if necessary.”

According to the fact sheet, goods covered by the CUSMA trade agreement would only be tariffed on the value of their non-U.S. content, and will remain tariff free until the U.S. establishes a process to apply the tariffs.

When asked if there was a scenario in which the tariffs would be removed, Trump said no: “This is permanent, one hundred per cent,” the president said.

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The move is part of a broader strategy by Trump to force auto manufactures to relocate production to the United States.

Earlier this month, Trump granted a temporary tariff exemption for autos covered under the Canada-U.S.-Mexico Agreement (CUSMA). The decision was made after Trump met with the big three automakers Stellantis NV, Ford Motor Co. and General Motors Co. In the meantime, he asked all three companies to start moving production to the U.S. to avoid tariffs.

On Monday, Trump and Hyundai announced a US$21-billion investment in the U.S., including a US$5.8-billion steel plant in Louisiana that will supply steel to auto plants in Alabama and Georgia. Honda is also expected to produce its next generation civic hybrid model in Indiana, instead of Mexico.

“Plants are going up all over the United States and many of them have already started,” Trump said Wednesday. “I think our automotive business will flourish like it’s never flourished before.”

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Liberal leader Mark Carney called Trump’s move a “direct attack” on Canadian auto workers, referencing a campaign announcement he made Wednesday morning at the Ambassador Bridge in Windsor, Ont., at which he pledged to create a $2-billion “strategic response fund” to help the Canadian automotive industry stay competitive.

Carney said he would convene a meeting of advisors tomorrow to discuss Ottawa’s response once they had received and reviewed the text of Trump’s executive order.

Canadian Chamber of Commerce president and chief executive Candace Laing said in a statement the job losses from Trump’s announcement will not be contained within Canada.

“Throwing away tens of thousands of jobs on both sides of the border will mean giving up North America’s auto leadership role, instead encouraging companies to build and hire anywhere else but here,” she said, in a statement. “This tax hike puts plants and workers at risk for generations, if not forever. ”

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Laing added that around 22 per cent of North American autos are produced by an interconnected supply chain between Ontario and Michigan. Auto manufacturing accounts for 128,000 direct Canadian jobs, with 100,000 employed in Ontario alone.

Today’s announcement is just the latest round in Trump’s trade war, with the U.S. administration also set to impose reciprocal tariffs on all countries on April 2. It remains unclear whether the CUSMA exemptions on goods and autos announced earlier this month, will remain in place past next week.

• Email: jgowling@postmedia.com

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