Criticism From All Sides of Trump's Assertion That Car Imports Are National Security Threat

Toyota, which has 10 manufacturing plants, plus two research and development centers in the U.S., said the president's proclamation "sends a message to Toyota that our investments are not welcomed, and the contributions from each of our employees across America are not valued. " Toyota called it a major set-back for the industry, workers and consumers.

The Alliance of Automobile Manufacturers, which represents both the two American auto companies and all the foreign-owned companies that built cars in the U.S., said the fact that the administration is still considering auto tariffs is a mistake. "By boosting car prices across the board and driving up car repair and maintenance costs, tariffs are essentially a massive tax on consumers. The higher prices would lower consumer demand and could lead to the loss of as many as 700,000 American jobs. The tariffs would also roll back the benefits from the Trump tax cut," the trade group said.

Center for Automotive Research CEO Carlo Bailo said the proclamation's argument is illogical. Her group is an independent nonprofit that studies the auto industry.

The Commerce Department report on how cars, trucks and vans and some auto parts (engines, engine parts, transmissions, powertrain parts and electrical components) has not been made public. But the proclamation drew the rough outlines of its arguments: that "the rapid application of commercial breakthroughs in automobile technology is necessary for the United States to retain competitive military advantage and meet new defense requirements. Important innovations are occurring in the areas of engine and powertrain technology, electrification, lightweighting, advanced connectivity, and autonomous driving. " The proclamation said that U.S. companies, because they are selling a smaller number of cars domestically than they used to, and because they only have 12 percent of the global market (it was 36 percent a generation ago), their ability to fund research and development is hindered.

Bailo said it's true that the Pentagon and car manufacturers cooperate on research in these areas, and that the Defense Department's Tank and Armament Division even has an offroad testing site dedicated to it at General Motor's proving ground in Michigan.

But, she said, it's not that the Defense Department waits for GM or Ford to fund a project on autonomous driving and then asks for the results to use in its vehicles. Rather, the Pentagon is a major funder of research in connected vehicles, autonomous vehicles, making vehicles lighter and so on. Academics and industry compete for those grants -- and all the foreign firms that have research and development in the U.S. -- such as Toyota -- bid on these projects. Bailo said the Pentagon funded $700 million in research over seven years. She said that the Obama administration set up a specific initiative to advance making vehicles lighter. So the proclamation essentially has it backwards, she said.

Toyota said, "We have been a leader in R&D through open-sourcing of patents in critical technologies such as fuel cells, hybrid electrification and continue to be transparent and collaborative with our innovations. Our goal is to develop technologies that help society and contribute to sustaining the economy and jobs in the U.S. We continue to innovate in areas of AI, autonomous and robotics technologies..."

The author of a bill that would prevent a president from levying national security tariffs without Congress's consent said that the country "dodged a bullet," but that it's clear the administration wants to reduce the volume of imported cars or tax the imports. "The threat of the further misuse of section 232 tariffs makes it clear that Congress must act now and pass my bipartisan legislation reasserting the legislature’s constitutional responsibility on trade and national security tariffs," Sen. Patrick Toomey, R-Pa., said. “Toyota Corollas and Volkswagen Beetles do not pose a national security threat."

He also noted that the law establishing 232 tariffs require that the report the proclamation alluded to be public. He said its premise that fewer imports would lead to more U.S. automotive R&D is flawed. "In 2017 alone, $21 billion was spent in the U.S. on automotive R&D — more than NASA spent," he said.

Senate Finance Committee Chairman Chuck Grassley said he supports trade negotiations with Japan and the European Union -- though he thinks the trade relationship is about far more than cars. He added, "“In the meantime, I’m continuing to work on bipartisan legislation to update Section 232 to give Congress, which has constitutional authority to regulate international commerce, a meaningful role in the process.”

It wasn't just Republicans reacting badly to the proclamation. The top Democrat on the Finance Committee, Sen. Ron Wyden of Oregon, said that the argument that foreign cars and car parts threaten America's national security "flies in the face of common sense. Many of these foreign-branded cars are actually manufactured in the United States by skilled American workers. I am in the corner of autoworkers and made-in-America cars, but this is not a strategy to help U.S. workers."

Bailo noted that even if Japan agreed to voluntary export restrictions on its parts, that wouldn't address Honda, Toyota and Nissan parts coming from Thailand or the Philippines. And she said, given that the proclamation protects South Korea from any future quotas or tariffs, that's surprising, given South Korea is a big player in electric vehicle batteries, an area where the administration fears the U.S. is falling behind.

She wonders if the U.S. will impose tariffs even if it doesn't get satisfaction from Japan or the EU by the end of 180 days. "I think it’s going to have such a huge impact financially, it's hard to pull the trigger."