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Trade war

Trump threatens to boost auto tariffs on GM restructuring

President revisits 25% duty, while USTR to examine 40% levy on China

A Chevrolet Bolt EV electric car at General Motors Orion Assembly in Lake Orion, Michigan.   © Reuters

WASHINGTON -- The administration of U.S. President Donald Trump hinted Wednesday that it is considering steeper tariffs on imported passenger vehicles, particularly from China, strengthening its protectionist stance in response to General Motors' plans to idle domestic and foreign factories.

If Washington imposed a 25% tariff on cars as it long has with small trucks, "many more cars would be built here" and GM "would not be closing their plants in Ohio, Michigan & Maryland," Trump tweeted.

"The President has great power on this issue," he wrote.

The U.S. charges a 2.5% duty on passenger vehicles from most countries. The Commerce Department is studying the possibility of higher tariffs based on Section 232 of the Trade Expansion Act of 1962, which allows action against trade partners over national security concerns.

At a September summit with Japanese Prime Minister Shinzo Abe, Trump said he would not raise automobile tariffs while the countries were in trade talks. The U.S. reached a similar agreement with the European Union in July. Still, the American leader continues to threaten additional duties if insufficient progress is made on trade issues.

The Commerce Department must report its findings to Trump by February. He then has 90 days to decide whether to introduce additional import restrictions.

U.S. Trade Representative Robert Lighthizer said he will examine how to "equalize" the tariffs the U.S. and China apply to automobile imports from each other. The U.S. imposes an additional 25% tariff on Chinese vehicles to the 2.5% it levies on most countries, while China charges a 40% duty on U.S.-made vehicles.

Lighthizer called Beijing's policy on U.S. autos "especially egregious," as they charge "more than double the rate of 15% that China imposes on its other trading partners."

"China's aggressive, state-directed industrial policies are causing severe harm to U.S. workers and manufacturers," Lighthizer said in a statement. "We are continuing to raise these issues with China. As of yet, China has not come to the table with proposals for meaningful reform."

The statement comes just days before a crucial summit between Trump and Chinese President Xi Jinping. The leaders of the world's two biggest economies are set to meet on the sidelines of the G-20 summit in Buenos Aires this weekend to discuss issues ranging from trade tensions to security.

On Monday, GM announced it would reduce its global salaried workforce by 15%. It also said it would stop allocating production of future models to five plants in North America as it cuts costs tied to conventional gasoline cars and diverts resources to new technologies like automated and electric vehicles.

The announcement was met with significant criticism, not least from Trump. The president said GM should halt car production in China instead of cutting it at home.

Nikkei staff writer Akane Okutsu contributed to this report.

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