WASHINGTON (May 15): President Donald Trump is expected to delay a decision by up to six months to impose auto tariffs later this week to avoid blowing up negotiations with the EU and Japan and further antagonize allies, as he ramps up his trade war with China, according to people close to the discussions.
Trump faces a May 18 deadline over how to proceed with his threat to slap a tariff of as much as 25% on imported cars and parts in the name of U.S. national security.
The news was welcomed by an equities market that has been battered by renewed trade concerns over the past two weeks. The S&P 500 erased its earlier losses of as much as 0.7% and was trading little changed as of 10:27 a.m. in New York. Shares of BMW AG surged as much as 5%, while Ford Motor Co, General Motors Co and Fiat Chrysler Automobiles also gained.
The president, who is due to make a state visit to Japan later this month, remains the wild card, according to people close to the discussion. Trump and a small group of aides including Commerce Secretary Wilbur Ross and trade adviser Peter Navarro are seen to be in favor of the new import duties against the advice of other advisers.
But people close to the discussions say even advocates of tariffs are still debating the scope of any action, complicating the discussions. Other advisers including U.S. Trade Representative Robert Lighthizer, who is leading the negotiations with the EU and Japan, have been urging Trump to postpone a decision, according to administration officials and other people familiar with the deliberations.
At a White House meeting on Tuesday officials firmed up the decision to delay tariffs for up to 180 days, according to one person familiar with the deliberations. A decision is expected to be announced publicly before the end of the week.
Spokespeople for Ross and Lighthizer did not immediately respond to a request for comment, and the White House declined to comment.
Trump last year ordered a Commerce Department investigation into whether imported cars and parts posed a threat to U.S. national security and was presented with a final report laying out a series of recommendations in February.
News of the delay also spurred a rebound in the euro Wednesday, while German bunds handed back some of their earlier gains as appetite for havens eased. Fed funds futures showed a slight reduction in bets on easing by the U.S. central bank, but continued to price in a rate cut this year.