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A possible new front in the trade war

A lineup of 3 Series sedans at a BMW dealership in Highlands Ranch, Colo. President Donald Trump has until Saturday, May 18, to decide if imported BMWs and Toyota truck parts are a threat to America’s national security.
A lineup of 3 Series sedans at a BMW dealership in Highlands Ranch, Colo. President Donald Trump has until Saturday, May 18, to decide if imported BMWs and Toyota truck parts are a threat to America’s national security. AP file | Jan. 13

“Automobile tariffs will make steel and aluminum [tariffs] look like a picnic,” said Mike Jackson, executive chairman of the largest car dealer in the country, AutoNation.

President Donald Trump has until Saturday, May 18, to decide if imported BMWs and Toyota truck parts are a threat to America’s national security.

This process began a year ago when the Commerce Department launched a Section 232 investigation into foreign autos and auto parts. The president already has used that section of 1962 law to put taxes on imported steel and aluminum — key ingredients in American-made cars, trucks and SUVs.

Next could be imported autos and auto parts. The review period expires in the week ahead, although the administration could extend it, thereby extending the uncertainty.

Imported autos and auto parts face the threat of a 25 percent U.S. tariff. A Toyota executive told Reuters the tax would add $1,800 to the price of a Camry, even though most of that car’s parts and the car itself are made in America.

The tariffs “will be extremely disruptive to the U.S. economy, very expensive for the U.S. consumer, and could bring on a recession,” Jackson said. About half of the new cars and trucks sold by AutoNation last year were imports.

The White House has not made public the Commerce Department report making the case that foreign autos are a national security threat.

The president and China trading threats over trade have led to the S&P 500 stock index selling off more than 3 percent. A delay in a decision regarding foreign auto import tariffs may give the auto industry and investors a respite from this front of the trade war, but it doesn’t remove the risk.

Tom Hudson hosts “The Sunshine Economy” on WLRN-FM, where he is the vice president of news. Twitter: @HudsonsView

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