United States announces six-month reprieve on vehicle tariffs

Flags of the U.S. Canada and Mexico fly next to each other in Detroit Michigan

Flags of the U.S. Canada and Mexico fly next to each other in Detroit Michigan

US President Donald Trump has announced a delay in imposing tariffs on imported vehicles from the European Union, Japan and other markets for 180 days to pursue negotiations, avoiding opening another front in his tariff battle with some of America's key allies. As part of the crackdown on transhipments, the two countries also agreed to implement measures to trace the origins of steel and aluminum that enter the North American market.

The rules of origin requirement could also be an impediment to Canadian exports, creating additional red tape for USA companies importing steel and aluminium from Canada and pushing them to choose American suppliers instead.

The effective date for removing the tariffs is the outstanding issue, the news service said.

Politico reported an agreement could be reached as early as Friday although negotiations were ongoing.

At the time Freeland called it the "the strongest trade action Canada has taken in the post-war era".

The Trump administration has agreed to remove aluminum and steel tariffs for Canada and Mexico as part of the trade agreement between the three nations.

Trump used the national security justification previous year to impose tariffs on imported steel and aluminum. And he did not mention China by name - the country that the USA and Canada will now carefully monitor to prevent it from dumping cheap steel into their market.

Trump directed his trade team to pursue negotiations and address the impact that imports are having on the US auto industry and its ability to invest in new research and development that he says is critical to the nation's security. Whatever happens with China, repealing the tariffs on Canadian and Mexican steel and aluminum is a win both for free trade and for common sense.

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The reported cited statistics that US-owned companies' share of the U.S. automobile market has declined from 67%, or 10.5 million units produced and sold in the United States, in 1985 to 22%, 3.7 million units produced and sold in the United States, in 2017.

John Bozzella, president of Global Automakers, representing foreign carmakers operating in the USA, added: "No automaker or auto parts supplier asked for this 'protection.' We are headed down a unsafe and destructive course".

On Friday, the Trump administration revealed that it planned to lift the tariffs on Mexico and Canada in the next 48 hours.

News about progress on NAFTA's replacement, known as the Unites States Mexico Canada Agreement, is rumored to be forthcoming.

It's unknown if the tariff detente will jar loose the long-standing logjam in Congress, where conventional wisdom says many Democrats are reluctant to give President Donald Trump even a whiff of victory as the 2020 election approaches. "As previously reported, the US and Mexico were near resolution of the Section 232 tariffs in November 2018 only to have the president reject the deal". Korean automakers including Kia Motors Corp. advanced on news the proclamation will exempt South Korea from any future tariffs because it renegotiated the U.S. -Korea Free Trade Agreement past year. Toyota, Hyundai-Kia, Subaru, Honda and others have significant research centers in the U.S.

Unlike his confrontation with China, Trump is virtually alone in favoring tariffs on all imported cars.

His proclamation said that maintaining the 25% tariffs remains "necessary", however.

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