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Japan: Auto Tariffs Would Damage US, Global Economy

June 29, 2018 0 Comments

If the U.S. imposes higher tariffs on foreign auto imports, it could backfire and jeopardize “hundreds of thousands” of U.S. jobs created by Japanese auto-related companies, warned a report from Japan’s government. The move could also raise prices for U.S. consumers and devastate both the U.S. and global economy.

According to the Japanese trade ministry, the country submitted a position paper to the U.S. Department of Commerce on Friday.

In May this year, U.S. President Donald Trump ordered the Commerce Department to conduct an investigation into auto imports and their impact on national security, seeking a reason to justify higher tariffs on foreign-made vehicles.

The move outraged Japanese automakers, which have invested billions of dollars in U.S. plants employing tens of thousands of workers.

According to the report, any trade restrictions Trump imposes would increase costs for U.S. consumers, and “could seriously affect” jobs. The proposed measures would slow, perhaps even halt, global trade, disrupt the market, and put global free trade “at great risk.” U.S. automakers could lose their competitive edge as export markets shrink – affecting U.S. auto-related industries both in and out of the country – and “eventually undermine the entire U.S. economy.”

If Trump imposes his 25 percent tariffs on vehicles and auto parts, drawing retaliatory action from other countries, up to 624,000 American workers could lose their jobs, according to a study by the Peterson Institute for International Economics.

Japan, already subjected to the increased tariffs on U.S. steel and aluminum, told the World Trade Organization that it “may levy retaliatory tariffs” on U.S. goods totalling 5 billion yet ($450 million) a year.

The report alleged that “broad trade restriction measures on automobiles and auto parts in the name of security raise serious questions about the compliance with the WTO agreements,” adding that possible rebalancing or retaliation from other countries could damage U.S. manufacturing and agricultural industries.

Japanese auto-related companies played a vital role in the growth of the U.S. manufacturing base since the 1980s, the report said, as well as creating over 1.5 million jobs and producing around 3.8 million cars in the U.S.

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