Ever since Donald Trump took office as the President of the United States, he has made it a mission to correct the trade deficits of the country with a range of nations. The trade war with China is a case in point but in addition to that many other tariffs are now been mulled. One of those is the tariff on autos that are imported into the country from different parts of the world.
However, it has now emerged that the Trump administration is considering holding the tariff hikes on imported cars for six months. This is due to the ongoing trade war with China, as per a report from CNBC. The deadline to impose the tariffs is fast approaching.
According to reports, the Trump administration has decided to not impose the tariffs for now. The Saturday deadline for the tariff imposition is going to pass without the US sparking another international trade issue. The tariffs are not only planned for imported cars but also for auto parts. These are imported from different parts of the globe. As such, the European Union and Japan will be most affected if the tariffs are raised.
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The US has held discussion with both the European Union and officials from Japan regarding the issue and it is believed that the move is primarily a strategy to exert pressure on the two to give the US far more favorable trading terms.
Impending Trade War
While the high stakes trade war with China has dragged on for awhile now, the US is unwilling to engage in trade wars with powerful trading entities like the European Union and Japan. If the auto import tariffs are imposed then it is almost certain that retaliatory tariffs will be placed on American goods.
That could lead to another skirmish that would potentially drag on for many months. As a matter of fact, the European Union has already stated that it has a ready list of goods on which it will hike tariffs if the US goes ahead with its plans.
Due to the possibility of the tariffs being imposed by Saturday, many automobile stocks had slumped but after the news came through that the tariffs are going to be delayed, the stocks jumped and erased the losses.