By William Mauldin and Siobhan Hughes 

WASHINGTON -- The Trump administration is casting the widest possible net in considering whether imported autos should be subject to tariffs based on national security grounds, worrying auto exporters from Mexico to Germany and generating complaints from Republican lawmakers.

The Commerce Department, which is directing the probe into whether a national security trade law should apply to imported autos, hasn't ruled out the possibility that such tariffs would apply to countries such as Canada and Mexico, where the U.S. has a free-trade agreements. Currently, automobiles produced by U.S. neighbors trade duty free under the North American Free Trade Agreement. Current talks to renegotiate Nafta are at a stalemate .

The global reaction to those tariffs was swift and pointed, with countries from the European Union to Japan issuing strong rebukes. Equally worrisome for Mr. Trump, however, was the reaction of his own Congress.

Sen. Orrin Hatch (R., Utah), chairman of the Senate committee that oversees trade, called the Trump administration's move "deeply misguided."

"Taxing cars, trucks and auto parts coming into the country would directly hit American families who need a dependable vehicle, whether they choose a domestic or a global brand," said the Finance Committee chairman, a Republican ally of Mr. Trump.

The tension in Washington and foreign capitals follows a Wall Street Journal report on Wednesday that Mr. Trump is seeking tariffs of up to 25% on imported cars.

Any car tariffs would be applied only after a rigorous analysis that would take months, the administration said. The Commerce Department has up to 270 days to review the industry and submit a report, followed by a decision from Mr. Trump on tariffs.

Mr. Trump's consideration of car tariffs appears aimed in part at reassuring manufacturing workers in the Midwest that the president is creating incentives for companies to locate jobs in the U.S., as he promised in his 2016 campaign. Mr. Trump ordered similar import tariffs on steel and aluminum, touting the importance of the industry and his promises to workers.

"There is no reason to use this provision to consider imposing tariffs on the automobile industry, and this appears to be either an attempt to affect domestic politics ahead of the election or for some other transactional purpose regarding ongoing trade discussions," said Sen. Bob Corker, a Republican of Tennessee, which produces Nissan and Volkswagen cars. "This is a dangerous course and should be abandoned immediately."

Even in the auto-centered state of Michigan, lawmakers expressed concerns about the effect on international supply chains.

"Certainly there's a reason for wanting to level the playing field, but you really have got to look at all the unintended consequences," said Rep. Mike Bishop (R., Mich.) "And if you don't, it would behoove the administration to sit down with us auto states to reflect on why this has huge implications."

Business groups worried the move would hit parts suppliers as well as auto makers based overseas that manufacture vehicles in the U.S., especially in the Southeast.

"A foreign vehicle manufacturer is going to depend on the importation of those parts," said Ann Wilson, vice president of the Motor & Equipment Manufacturers Association. "If it gets harder to get those parts in here, and we sell fewer or those vehicles, that's going to impact the bottom line of folks who are making vehicles here."

(END) Dow Jones Newswires

May 24, 2018 12:53 ET (16:53 GMT)

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