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Trade war

Nobody wins with US auto tariffs, Ghosn says

Chief of Nissan and Renault eyes more local production if levy implemented

Carlos Ghosn, chief of Nissan and Renault, expressed concern about additional auto tariffs being considered by the U.S. and other countries.

TOKYO -- A 20% duty on imported vehicles being considered by the U.S. would produce no winners, said Carlos Ghosn, chairman of Japanese automaker Nissan Motor and its French partner Renault.

Ghosn sat down with Nikkei ahead of U.S. Commerce Department hearings on auto tariffs proposed by the administration of President Donald Trump. Such duties -- along with the ongoing renegotiation of the North American Free Trade Agreement with Mexico and Canada -- would risk disrupting an auto industry reliant on cross-border supply chains.

The tariff would be "detrimental for everybody," Ghosn said. Though the impact on Renault would be minimal, as it does not operate in the U.S., Nissan may be affected via American trade with Japan and Mexico, he explained. The Yokohama-based automaker exports cars from both countries to the U.S. market.

"There is no way we can escape the fact that the costs of cars are going to go up" if tariffs are implemented, and U.S. consumers will be the first ones affected, Ghosn warned.

But the chairman expressed caution about taking immediate action to prepare for the possible levy. "Any change in the supply chain has long-term consequences," he noted.

Ghosn said the alliance must first wait to see if any trade policy changes are lasting or just "tactical decisions" to gain an edge in negotiations. But regardless of the outcome, he said, the consequence will be "more and more localization" of production.

Asked about the future direction of the alliance, which also includes Japan's Mitsubishi Motors, Ghosn stressed that "performance and sustainability" are his main concerns.

The alliance chief said in an April interview that the new relationship between the companies would be determined by the end of his term as Renault CEO in 2022.

This time, he elaborated on the time frame. "It would be fair to say that it's going to be sooner than later. We're not going to wait for the last minute."

Ghosn did not nail down the details of the future structure, including whether it would entail a merger or establishing a holding company. But it should be acceptable to the boards of all three companies "by definition," he said.

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