President Trump’s renewed threat to hit the European Union with auto tariffs if it doesn’t agree to a trade deal is weakened by the fact that the deadline to impose the tariffs technically passed last year.
That doesn’t mean the president won’t still try to implement the tariffs on autos and auto parts using the authority granted by Section 232 of the Trade Expansion Act, trade policy experts note. Rather, it means that the bar for a court challenge would be lower than if he tried last year.
“The president can certainly still take a political action,” said Derek Scissors, senior fellow at the American Enterprise Institute. “It would get challenged and possibly stayed in courts but would show voters his intention to block auto imports.”
Trump has periodically threatened to put 25% tariffs on auto and auto parts imports, which would be a heavy blow to the EU auto industry. The Commerce Department produced a study last February to justify the tariffs under Section 232, which allows levies on the basis of national security. However, the White House didn’t enact them at the time because the talks with the EU still seemed possible.
Trade law experts state that after the department provides a 232 report to the White House, the president has 90 days to act, with a possible additional 180 days to negotiate with stakeholders. That timeline theoretically ran out on Nov. 14. At the time, the administration’s trade policy team was busy completing the United States-Mexico-Canada Agreement and advancing U.S.-China trade negotiations. The EU talks were on the back burner for several months. It was widely assumed that the administration had simply dropped the auto tariff threat.
The EU returned to the forefront on trade policy following congressional passage of USMCA and the White House reaching ‘phase one’ of its trade deal with Beijing earlier this month. Trump revived the auto tariff threat last week following meetings with world leaders at the G-20 summit in Davos, Switzerland.
“I said, ‘Look, if we don’t get something, I’m going to have to take action, and the action will be very high tariffs on their cars and other things that come into our country,’” Trump said.
Commerce Secretary Wilbur Ross said earlier this month the auto tariffs were still an option. He told Bloomberg last week that many “simply don’t understand section 232 — what was needed in November was for the president to decide on a path forward. He did — he decided the path forward was to negotiate as long as that was bearing fruit. The November deadline was an imaginary deadline.”
The Trade Expansion Act doesn’t allow that, argued Jennifer Hillman, a senior fellow for trade and international political economy at the Council on Foreign Relations and a Georgetown University Law Center professor. “I am of the view that the window is closed and that imposing tariffs on cars would require a new 232 investigation,” Hillman said. Another Section 232 investigation would take several months.
That doesn’t mean the White House won’t still assert the authority to impose the tariffs under 232, ceded critics. “Given the fact that the administration has broadly interpreted its authority in the past, it is not hard to imagine they would do so again in this instance,” said Inu Manak, a trade policy expert for the free market Cato Institute. “And with no movement in Congress to rein in presidential authority on 232, I think the administration thinks it has a lot of leeway here.”
Hillman agreed that the administration might claim that the Commerce Department report gives it the authority regardless of any deadline. She added that the White House has other options, such as the use of the International Emergency Economic Powers Act, which gives the president broad powers to respond to an “unusual and extraordinary threat” to the U.S. or its economy. President Jimmy Carter used it to respond to Iran, and President George W. Bush invoked it following 9/11. The White House would have to argue that the EU presented a similar threat.
Ultimately, it boils down to the courts, said Gary Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics. Trade groups would be certain to challenge the tariffs. A court could stop the tariffs with an injunction, but the courts have rarely taken up related cases, and the precedent that does exist would seem to favor the White House. “If they can get an injunction, then the burden would shift to the administration to get that injunction removed by the higher court,” Hufbauer said. “But if there isn’t an injunction, then time is on the administration’s side.”
Representatives for the White House, the Commerce Department, and the U.S. Trade Representative’s Office could not be reached for comment.
