April 8, 2019

President Trump Threatens New Tariffs On Autos Despite WTO Ruling That Questions National Security-Related Tariffs

After promising early last week to shut down the border between the United States and Mexico if Mexico does not implement new mechanisms to combat illegal immigration, President Donald Trump had backed off that threat by the end of the week, saying on Twitter that he instead would consider imposing 25 percent tariffs on cars made in Mexico. He would impose those penalties using his Section 232 national security powers.

The president then warned if the penalties don’t work, he would close the border. President Trump’s threat came despite a World Trade Organization (WTO) ruling last week that could threaten the United States’ ability to put tariffs in place citing national security reasons.

In a decision issued last Friday that involved Russia and the Ukraine, the WTO determined it has the authority to judge whether these measures, including the United States’ current Section 232 tariffs on steel and aluminum tariffs, are justified. (The Trump administration, of course, has argued the WTO doesn’t have the power to rule on such matters.)

Canada, the European Union, Mexico and at least a half-dozen other U.S. trading partners already have asked the WTO to determine if the Trump administration’s Section 232 metal tariffs are actually necessary to protect America’s national security. The WTO’s ruling issued last week now could make way for that challenge.