Mara Lee

Countries that export billions of dollars' worth of autos and auto parts into the U.S. will punch back if tariffs are imposed on their products, top officials from Europe and Canada warned. And Mexico, which has one of the largest trade deficits in the automotive sector, reminded the U.S. government panel hearing testimony that its law enforcement cooperation with the U.S. countering narcotraffickers is invaluable. "A strong and successful United States is in the interest of Mexico no less than a strong and successful Mexico is in the interest of the United States," said Mexican Ambassador Geronimo Gutierrez Fernandez.

Mexico's chief NAFTA negotiator will meet with U.S. Trade Representative Robert Lighthizer on July 26, but Canada's foreign minister will not attend. Economy Minister Ildefonso Guajardo told reporters in Mexico about the trip to Washington. The administration has been telling lawmakers that its ambition is to close a deal with Mexico first, and then bring Canada to the table. White House Press Secretary Sarah Huckabee Sanders told reporters July 18: " We see a lot of progress on the conversations with Mexico and if we could make a bilateral deal with them, we're certainly very happy to do that." But Mexico continues to insist it wants a trilateral, not a bilateral, trade agreement.

President Donald Trump told a CNBC interviewer on July 20 that he's "ready to go to" with tariffs on $500 billion worth of Chinese imports. American Apparel and Footwear Association President and CEO Rick Helfenbein responded to the threat with concern in a news release: "We all want to participate in a trading system that creates more jobs in America and respects our intellectual property, but tariffs will not do this. ... More tariffs will not resolve this conflict -- they will only create inflation, hurt the consumer, and damage the economy."

The international trading system is in its deepest crisis in 70 years, European Commissioner for Trade Cecilia Malmström said, and while she understands the U.S.'s frustration with China's abuses, she laid the blame squarely on the U.S. In a speech July 19, she said the EU is concerned about the U.S. blocking appointments to the appellate body at the World Trade Organization, its attempt to justify steel and aluminum quotas on tariffs on national security grounds, its unilateral tariffs against China, and its use of "increasingly aggressive rhetoric at allies."

The Commerce Department posted one approval of a steel product exclusion request, and posted 215 denials on July 17. But the company that received the approval is not breaking out the champagne. Max Daetwyler Corp., a small North Carolina manufacturer of blades used to wipe away excess ink in printing processes, filed seven product exclusion requests, all for steel made in France it uses to make the blades. Two have been approved, five have been denied, and it's still waiting to hear on two more.

In more than 2,300 comments on the possibility of tariffs on imported autos and auto parts, only three support the idea, according to Jennifer Thomas, vice president of federal government affairs at the Alliance of Automobile Manufacturers. Thomas, who represents all companies with American plants, was one of 45 witnesses testifying at the Commerce Department July 19, as the department investigates whether an increase in auto parts imports impairs the economic security of the auto industry or the ability of the military to benefit from advanced technologies such as autonomous driving (see 1805240002).

The auto industry is launching a media blitz this week with TV and print ads, and a "drive-in" press event of American workers from German, Japanese and other foreign-owned auto plants. The TV ad, paid for by the Association of Global Automakers, uses the kind of imagery often used in political ads -- a barn in a field of grain -- and a deep-voiced narrator noting that foreign automakers have plants in Indiana, Kentucky, Alabama, Georgia, Tennessee, Mississippi and Ohio. Every one of those states voted for Trump in 2016.

Trade Adjustment Assistance -- the retraining and wage support program designed to help workers whose jobs were eliminated by offshoring and surges of imports -- should be expanded to cover those who were laid off because their export markets were lost, some Congress members say. Rep. Suzan DelBene, D-Wash., along with three other Democrats, introduced a bill July 17 that would make these people eligible for the program, which pays tuition and extends unemployment insurance for up to two years. "Nobody wins in a trade war, and the biggest casualties are hardworking Americans," DelBene said. "While the President plays games with our economy, we will continue to fight for good jobs and good wages."

Agriculture Secretary Sonny Perdue said he thinks negotiators "are very close to getting agreement with Mexico and Canada" on NAFTA. Perdue, who spoke July 17 at an event hosted in Washington by Axios. "As you know, Canada has finally acknowledged their Class 7 milk [policy], keeping our dairy products out of Canada, is not a free trade effort like NAFTA," he said. But a few hours later, Canada's Deputy Ambassador to the U.S. Kirsten Hillman denied Canada prevents sales of U.S. milk in her country.

Senate Finance Committee Chairman Orrin Hatch, R-Utah, called the White House's approach to tariffs "misguided and reckless," and said if the Trump administration "continues forward" with tariffs as a way to protect U.S. manufacturing, "I will work to advance trade legislation to curtail presidential trade authority." He said during a speech on the Senate floor July 17 that he is sympathetic to the effort (see 1807120023) from Sen. Bob Corker, R-Tenn., to rescind steel and aluminum tariffs and prevent tariffs on autos and auto parts, and he is discussing legislative options with his colleagues.