President Donald Trump is threatening to impose new tariffs on imported cars again. This time, he’s claiming that the protectionist measure could have saved the factories that GM is closing.
In a pair of Wednesday tweets, the president pointed to the 25% levies that are placed on pickup-truck imports into the U.S., and said this “chicken tax” was the reason why the U.S. small truck business is doing well.
“If we did that with cars coming in, many more cars would be built here and GM would not be closing their plants in Ohio, Michigan & Maryland,” Trump tweeted, adding that “The President has great power on this issue.”
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.” If we did that with cars coming in, many more cars would be built here.....— Donald J. Trump (@realDonaldTrump) November 28, 2018
.....and G.M. would not be closing their plants in Ohio, Michigan & Maryland. Get smart Congress. Also, the countries that send us cars have taken advantage of the U.S. for decades. The President has great power on this issue - Because of the G.M. event, it is being studied now!— Donald J. Trump (@realDonaldTrump) November 28, 2018
According to Germany’s Wirtschaftswoche magazine, Trump is already preparing to impose 25% tariffs on car imports from everywhere except for Canada and Mexico, despite the fact that his administration has said it won’t target the EU and Japan with new tariffs while trade talks are ongoing.
The publication said Trump could make the move as soon as next week, now that the Commerce Department has presented him with a report that he asked for on the possibility of doing so on “national security” grounds—the same justification the president used for his steel and aluminum tariffs.
Meanwhile, U.S. Trade Representative Robert Lighthizer said Wednesday that Trump had to look at how to increase tariffs on Chinese car imports from 27.5% to 40%, to bring them in line with the tariffs China levies on U.S. car imports—China imposes lower tariffs of 15% on imports from other countries.
“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 in a statement. “We are continuing to raise these issues with China. As of yet, China has not come to the table with proposals for meaningful reform.”
The chicken tax is so named because it is a vestige of a half-century-old tranche of tariffs that were designed to retaliate against France and West Germany for their tariffs on U.S. poultry. The chicken tax once covered items such as brandy and potato starch, but these days all that’s left is the tariff on imported light trucks.
Trump is right that people in the U.S. like their American-made light trucks, though that is in fact one of the main reasons for GM closing the factories it’s closing. Customers want trucks and SUVs rather than sedans, so the plants that make sedans are being axed.
GM’s restructuring is also designed to make it fitter for the new era of electric cars. Trump has threatened to remove GM’s subsidies in retaliation for its plant-closure plans, but the only clear subsidies associated with GM’s products can be found in the tax relief consumers get for buying electric cars.