WASHINGTON — Trump administration officials are considering whether to start a new trade investigation against the European Union as the window closes for hitting Brussels with automobile tariffs, according to multiple people briefed on the issue.
Such a move would mean that European auto imports wouldn’t be subject to duties out of national security concerns, but the trading bloc would be subject to a much broader inquiry, the people said.
“What it would do is it would create a situation that for another year would give the president leverage over the EU,” said a former administration official.
President Donald Trump was supposed to make a decision by November 14 on whether to take action against imports of automobiles and auto parts from the EU.
But with the deadline passed, questions are now being raised over whether he can continue using Section 232 of the Trade Expansion Act of 1962 to take any future tariff action. The previously little-used provision allows the president to impose trade restrictions if imports are considered a threat to national security.
Trump has consistently complained that the EU imposes a 10 percent tariff on vehicles while the U.S. only has a 2.5 percent import duty on passenger cars
An investigation under Section 301 of the Trade Act of 1974 would be potentially more sweeping and would subject numerous European industries, subsidies and other programs to scrutiny. The move would also effectively terminate the national security investigation.
Section 301, which also has been little used by previous administrations, allows the president to impose trade restrictions if an investigation finds that a country is engaged in a practice that is unjustifiable and burdens or restricts U.S. commerce.
Trump used the Section 301 provision to justify wave-after-wave of tariffs on China after an investigation by the U.S. Trade Representative’s Office found that Beijing’s policies on technology transfer and intellectual property “burden or restrict U.S. commerce.”
Those briefed on the latest matter said it wasn’t clear which EU trade policies that the administration would target in any inquiry, and whether autos are still the main target of Trump’s potential actions.
Trump has consistently complained that the EU imposes a 10 percent tariff on vehicles while the U.S. only has a 2.5 percent import duty on passenger cars. He’s also argued that the current transatlantic trade relationship is unfair because the United States has a $151 billion trade deficit in goods with the EU.
Cars destined for export in Germany | Alexander Koerner/Getty Images
“Many countries charge us extraordinarily high tariffs or create impossible trade barriers. Impossible,” Trump said last week in an economic policy speech in New York. “And I’ll be honest: European Union — very, very difficult. The barriers they have up are terrible. Terrible. In many ways, worse than China.”
The U.S. Trade Representative’s Office, which would be responsible for launching a new Section 301 investigation, did not respond to an inquiry on the potential action. The Commerce Department, which is in charge of Section 232 investigations, referred questions to USTR and the White House.
Already, Trump has faced enormous pressure for trying to use national security justification to pursue tariffs on allies.
Trump invoked such a provision to justify duties on steel and aluminum imports that began last year. The law was invoked again to investigate the national security risk posed by imports of automobiles.
Canada, Mexico, South Korea and Japan were able to escape steel and aluminum duties after negotiating trade deals with the U.S., but EU auto imports have remained in the administration’s cross hairs.
Section 232 gives the president a 180-day time limit to negotiate agreements to address any national security concerns, if he decides to punt on imposing tariffs, “but it doesn’t require an announcement,” said Gary Hufbauer, a senior fellow with the Peterson Institute for International Economics.
U.S. Trade Representative Robert Lighthizer submitted a report to the president last week providing Trump an update on the European negotiations, but a decision was never made.
A recent court ruling has raised questions about whether Trump’s failure to make a decision by the deadline nullifies his use of the law to threaten auto tariffs.
The U.S. Court of International Trade ruled last week that Trump violated a separate Section 232 deadline when he tried to double steel duties on Turkey in August 2018 after a 90-day deadline.
Trump has since reduced the steel tariffs on Turkey back to their original level of 25 percent but the ruling provides the first instance of a court pushing back on the president’s use of the law.
“The president’s expansive view of his power under section 232 is mistaken, and at odds with the language of the statute, its legislative history, and its purpose,” the court wrote in a November 15 opinion.
Critics of Trump’s use of the statute have held up the ruling as a clear indication that the window for tariffs has closed.
“As a recent U.S. trade court opinion stated, the president’s authority to impose ‘national security’ tariffs or other import restrictions under Section 232 is not indefinite,” Senator Pat Toomey (R-Pennsylvania) said. “With the 180-day deadline having passed, the window for new ‘national security’ taxes on imported automobiles has closed.”
Legal experts say the ruling also puts firmer ground under future challenges to any action Trump might take now on auto tariffs against the EU.
“I strongly believe if the president were to impose tariffs now, there would unequivocally be legal challenges,” said Jennifer Hillman, a Georgetown University law professor who previously served as a WTO judge and general counsel at USTR.
“They could be at substantial risk of losing that one,” she added.