The U.S. Commerce Department said Thursday that it won't exempt major U.S. trading partners from duties as high as 25 percent on the raw materials imported to the U.S. used to build new cars.
The new protectionist import tariffs announced Thursday by Commerce Secretary Wilbur Ross on imported steel and aluminum go into effect at midnight. After first announcing its intent to tax steel and aluminum in March, the Trump administration granted a temporary exemption to Canada, Mexico, and the European Union.
"We take the view that without a strong economy, you cannot have strong national security," Ross said Thursday. "The president's overwhelming objective is to reduce our trade deficit."
The duties could translate to higher prices for new cars and fewer auto industry jobs. According to estimates compiled by the Council on Foreign Relations, new car prices in the U.S. could climb by as much as 0.8 percent, which could result in global sales declines of American-built cars as high as 3.6 percent.
"We would expect declining sales to result in auto-industry job losses ranging from 18,000 to 40,000 by the end of 2019," the Council said in a blog post in March.
Automakers responded negatively to the Trump administration's first announcement of the duties in March and on Thursday the trade group that represents foreign-brand car dealers echoed that sentiment.
"The decision to forge ahead with these steel and aluminum tariffs will adversely impact the price of consumer goods, including the millions of new vehicles Americans buy each year," American International Automobile Dealers Association President and CEO Cody Lusk said in a statement.
Canada, Mexico, and the EU are widely expected to retaliate. EU officials have already floated the idea of 25-percent import tariffs on U.S.-built products such as denim clothing, cigarettes, motorcycles, and consumables such as bourbon and peanut butter.
The tariffs could also complicate ongoing NAFTA negotiations between the U.S., Canada, and Mexico. Those talks, Ross said Thursday, "are taking longer than we hoped."