WASHINGTON -- The Trump administration wants to require imported automobiles to meet stricter environmental standards in order to protect U.S. automakers and factory jobs, according to two sources familiar with the administration's thinking.
Two U.S. automotive executives said Friday they believed the idea had been floated in White House talks last week by Commerce Secretary Wilbur Ross, but said the auto industry had not asked for the changes or backed them.
U.S. automakers have long urged removal of non-tariff barriers in Japan, South Korea and other markets that they believe unfairly hinder U.S. exports. There are also concerns that any new non-tariff U.S. barriers could violate WTO rules.
Citing unnamed senior administration and industry officials, The Wall Street Journal first reported that President Donald Trump had asked several agencies, including the EPA and Commerce Department, to pursue plans to use existing laws to subject foreign-made cars and light trucks to stiffer emissions standards.
Responding to the Journal story, White House spokeswoman Sarah Sanders said Friday President Trump "will promote free, fair and reciprocal trade practices to grow the U.S. economy and continue to (bring) jobs and manufacturers back to the U.S.”
The initiative is still in the planning stage, with EPA officials working to craft a legal justification for the policy, the paper said. It said there were hurdles to its implementation, including opposition from some in the administration.
The paper said the EPA is exploring whether Volkswagen AG's recent diesel emissions violations give the agency legal room under the Clean Air Act to set tougher rules, though it is also pursuing other alternatives that would have a broader impact.
The rules could effectively require more expensive technology on some foreign light vehicles or subject those cars to more expensive hurdles that can be billed to the manufacturer or importer, the Journal said. The costs, if implemented, would likely be passed on to consumers.
The so-called “nontariff barrier” -- a protectionist strategy the U.S. has long condemned in other countries, notably Japan and South Korea -- is designed to reduce the relative cost of vehicles manufactured in the U.S. by American workers, administration officials told the Journal.
The proposal is largely aimed at European and Asian imports, which have been a target of Trump on Twitter. Vehicles imported from Canada and Mexico would be exempt because of rules under the North American Free Trade Agreement, which is being renegotiated.
'A bad idea'
John Bozzella, CEO of the Association of Global Automakers, called the proposal "a bad idea and a pretext for protectionism" and warned it "will increase prices for consumers and invite retaliatory actions" by other countries.
"It is ironic the United States now appears to be legitimizing non-tariff trade barriers after working for decades to dismantle them when used by our trading partners," Bozzella said in a statement Friday.
European and Asian automakers with vehicle assembly plants in the United States, such as BMW, Mercedes, Honda Motor Co., VW, Toyota Motor Corp., and Nissan Motor Co., but that also import vehicles to the U.S., are expected to vigorously challenge the plan.
“The possibility of holding vehicles built outside the United States to stricter environmental standards than those produced domestically is a direct threat to America’s free market. It takes the car buying decision, one of the most important and expensive choices American families face today, and allows the government to weigh in," said Cody Lusk, president of the American International Automobile Dealers Association. "This kind of non-tariff barrier is a tax on consumers and will absolutely result in higher priced vehicles and more limited choices."
Lusk added the AIADA's 9,600 U.S. dealerships and their 577,000 U.S. employees would "strongly oppose this measure.”
The non-tariff barrier, if implemented, could have a greater potential effect proportionately on European automakers, which collectively import a greater percentage of vehicles from plants outside the United States.
In comparison, Japanese and Korean automakers made about 70 percent of the vehicles they sold last year in the United States at North American plants. European automakers built only 30 percent of the light vehicles sold in the U.S. in North America.
Foreign automakers operate 17 assembly plants in the United States, 12 of which are owned by Asian manufacturers.