November 28, 2018

Trade Worlds Collide: USTR to Investigate China Auto Tariffs

Casie Daugherty

In an inauspicious sign for those hoping for a major thaw in trade relations between the U.S. and China, USTR Robert Lighthizer announced today that he would “examine all available tools to equalize the tariffs applied to automobiles” in relation to China.

USTR pointed to China’s current 40 percent tariff on U.S. automobiles as being an egregious sign of the unfair trade practices that the Chinese government takes against the U.S. According to USTR, China imposes a tariff of only 15 percent on other trading partners, and the U.S. applies a tariff of 27.5 percent to Chinese autos.

Today’s statement highlights two of the larger trading issues that the U.S. is currently in the midst of: an ongoing tariff war with Beijing as a result of a Section 301 investigation and the possibility of imposing 25 percent tariffs on autos and auto parts through a Section 232 investigation into foreign imports.

The president suggested this morning that the closing of GM plants in the U.S. could have been avoided with a tariff similar to the so-called “chicken tax” – a 25 percent tariff on foreign-produced pickup trucks and work vans. However, both domestic and foreign car manufacturers have spoken out against the Administration’s proposal on adding new tariffs to autos and auto parts.

There had been high hopes that a meeting between President Trump and Chinese President Xi Jinping, now scheduled to occur over dinner on Saturday at the G20 Summit, could yield real results – including, perhaps, a delay in raising the current 10 percent tariff on $200 billion in Chinese imports to 25 percent that is scheduled to begin in the new year. However, the USTR statement, coupled with the updated Section 301 investigation report released just before Thanksgiving, and various statements from Administration officials in the last several days makes this optimistic position seem less likely.

However, stranger things in the trade world have happened, and all eyes will be on Buenos Aires this weekend.

Casie Daugherty

Casie helps to lead the firm’s trade practice, where she covers client needs in relation to NAFTA, tariff action, CFIUS, and other trade-related actions.