Automakers expect delay in decision on import tariffs

Major automakers think US President Donald Trump will again this week push back a self-imposed deadline on whether to put up to 25% tariffs on national security grounds on imported cars and parts from the European Union (EU) and Japan amid an ongoing trade war with China, five auto officials told Reuters.

The anticipated delay - expected to be announced later this week - comes as foreign automakers are eager to highlight US investments to try to dissuade Trump from using tariffs that they argue could cost US jobs.

US Commerce Secretary Wilbur Ross said earlier this month tariffs may not be necessary. EU officials expect Trump to announce a six-month delay when he faces a self-imposed deadline this week. Trump in May delayed a decision on tariffs by up to 180 days as he ordered US Trade Representative Robert Lighthizer to pursue negotiations.

Lighthizer’s office recently asked many foreign automakers to provide a tally of investments they have made in the United States, several auto industry officials told Reuters.

The White House and Lighthizer’s office declined to comment.

On Wednesday, Tennessee Governor Bill Lee, a Republican ally of Trump’s, plans to attend a groundbreaking at Volkswagen’s Chattanooga assembly plant where they will mark the beginning of an $800 million expansion to build electric vehicles and add 1,000 jobs. The high-profile event will also include remarks from Germany’s ambassador to the United States.

VW announced the plan to begin producing EVs by 2022 in Tennessee in January.

Daimler AG said in late 2017 it planned to invest $1 billion to expand its manufacturing footprint around Tuscaloosa, Alabama, creating more than 600 jobs. Tariffs on Japan seem even less likely than the EU, experts say.

Japanese automakers and suppliers have announced billions of dollars in investments, most notably a $1.6 billion joint venture plant in Alabama by Toyota Motor Corporation and Mazda Motor Corporation.

Trump and Japanese Prime Minister Shinzo Abe signed a limited trade deal in September cutting tariffs on US farm goods, Japanese machine tools and other products.

Although the agreement does not cover trade in autos, Abe said in September he had received reassurance from Trump that the United States would not impose auto tariffs on national security grounds. Lighthizer said the two countries would tackle cars in negotiations expected to start next April.

Stefan Mair, member of the executive board of the BDI German industry association, said a deal to permanently remove the threat of tariffs was needed. “The investments that are not being made are costing us the growth of tomorrow, even in sectors that are seemingly not affected,” he said.

Germany’s merchandise trade surplus with the United States - $69 billion in 2018 - remains a sore point with the Trump administration as does Japan’s $67.6 billion US trade surplus last year - with two-thirds of that in the auto sector.

Environmental group the Sierra Club on Tuesday urged Automakers and dealerships to help cut US carbon emissions and fight the climate crisis by making more electric vehicle available in US showrooms.

“It’s past time for the auto industry to put some action behind its promises of progress and work to tackle emissions from transportation,” said Hieu Le, the report’s primary author.

The Sierra Club said its survey of more than 900 US dealerships found that 74% did not stock a single EV, but noted about 40% of dealerships in states that have adopted California’s zero emission vehicle (ZEV) mandate had EVs for sale.

The report found that 44% of dealerships offering EVs had no more than two EVs available in showrooms. Dealer salespeople regularly failed to provide information on tax incentives or had trouble answering questions about EV technology, the report found. The group said Automakers should boost EV production and offer then in more states, provide better incentives for dealerships selling EVs and make it easier for dealers to get certified to sell them.

The Sierra Club noted the United States accounts for 15% of global emissions, with the leading source being the transportation sector and said “accelerating the adoption and sales of EVs is crucial to tackling the climate crisis.”

Asked for comment, National Automobile Dealers Association spokesman Jared Allen responded that “the number of battery electric vehicles stocked on franchised dealership lots is literally a function of supply and demand - nothing else.” He also noted that many Automakers do not yet manufacture electric vehicles that could be put in a showroom.

Through the first nine months of 2019, US plug-in hybrid and battery electric vehicle (EV) sales remained flat from a year earlier at around 240,000, according to two groups tracking sales. EV sales accounted for about 1.9% of US vehicle sales. Of 2019 EV sales, about half are Tesla Inc vehicles.

Californians bought 50% of all EVs sold in 2018, but the auto dealer group’s Allen noted other U.S. consumers “don’t have access to the same recharging infrastructure, incentives, HOV access, necessary to make owning an EV desirable, practical or feasible in many cases.” Roughly half of the 32,000 US dealer franchisees “can’t possibly stock a purely electric vehicle because their automaker doesn’t manufacturer one for sale,” Allen added.

Automakers are investing tens of billions of dollars in EV technology over the next five to 10 years and promising dozens of new offerings.

On Wednesday, Volkswagen AG will hold a ceremony in Tennessee to mark the start of groundbreaking of an $800 million expansion to build electric cars starting in 2022. On Sunday, Ford Motor Co will unveil its Mustang-inspired electric SUV as part of its plan to invest $11.5 billion electrifying its vehicles by 2022.

Gloria Bergquist, a spokeswoman for the Alliance of Automobile Manufacturers, said that “while electric vehicle sales remain low, they are growing, and Automakers expect to see a tipping point when these vehicles become more mainstream.”

The Sierra Club is one of a number of environmental groups that have challenged the Trump administration’s efforts to block California from setting its own stricter tailpipe emissions limits and setting ZEV requirements. There are no federal ZEV requirements.

Meanwhile, the burgeoning lithium industry, which produces the powerhouse metal used to make electric vehicle (EV) batteries, has entered its first major downturn, an unwelcome bruising for investors eager to help combat climate change.

Reuters