^{It won’t grow faster without addressing weaknesses in education and productivity.}

With the election of Andrés Manuel López Obrador as president of Mexico, the perennial question resurfaces: Might Mexico see a higher rate of growth? Its economy has grown at a rate of about 2 percent per year for about a quarter century, about half the pace of other emerging nations.

The sad reality is that the new Mexican regime probably cannot improve its economic performance unless it can address basic problems with education and productivity.

Mexican economic policy gets many things wrong, and the country has a high level of corruption. But these are not the main hindrances to greater growth. China, which may be at least as corrupt, has grown in the 8 to 10 percent range for a few decades and more recently has exceeded 6 percent; India, which arguably has worse and more arbitrary restrictions on economic activity, has seen some years of 6 to 8 percent growth.

Nor can the scourge of drug violence fully explain Mexico’s anemic economy. Mexico’s south sees much less fallout from that violence, which has pushed the murder rate to more than 2,000 per month, yet it is one of the poorest regions of the country. It is the north, sometimes directly in the line of fire, which has grown most rapidly and attracted the most industry.

Instead, it is education that is arguably Mexico’s most fundamental problem. In most emerging economies, if you are ambitious and seek higher wages, you will invest in more education. Mexicans have traditionally had another choice — crossing the border to work in the U.S. Mexicans who make this choice can move from earning a dollar or two a day to 10 or 15 dollars an hour, though with higher living costs. It is hard to beat that boost simply by finishing high school or even college in Mexico.

So a lot of Mexico’s most ambitious lower-income people have an incentive to stop their education rather than invest in it. That in turn has harmed educational culture, and furthermore the incoming government has promised to reverse some positive educational reforms already underway. It is unlikely that Mexico will soon become more like South Korea, for instance, with its obsession with private tutors and higher education. Near the peak of Mexican migration last decade, about 15 percent of the Mexican labor force was working in the U.S.

You might wonder whether it is economically advantageous for Mexico to send its migrants to the U.S. It probably is still a net benefit, since they can save money and also send remittances back home. Mexico is in fact one of the wealthiest of the “middle income” countries, with a per capita annual income of about $18,100 (adjusting for differences in purchasing power), above that of Brazil (about $15,500), and still slightly higher than China (about $16,800).

Mexico’s second fundamental problem is productivity at the relevant margin. A lot of Mexican companies and plants have remarkably high productivity levels, including in cement, food products, television programs and automobiles. They compete successfully with companies from the U.S. Their success contributes to Mexico’s relatively high per capita income, but it is hard to boost productivity in those companies very much because they are already on the frontier, unlike their peers in, say, India.

The more typical Mexican enterprise is smaller. These companies have fairly low levels of productivity and many do not wish to grow much larger, to avoid both regulatory and tax burdens. Admittedly, this labor can be and often is absorbed into the more formal, more productive sectors of the economy, including exports. But the rate of absorption is quite slow, which in turn helps to set the slow growth rate of the economy. And in any case neither the high-productivity nor the low-productivity firms have that much room to grow within their respective categories, a major difference from many other emerging economies.

It seems incongruous to call Mexico “the Denmark of Latin America,” a label once applied to Uruguay. But that may be Mexico’s future. Denmark is among Europe’s most prosperous countries, yet since the late 19th century it has averaged only about 1.9 percent growth with no huge positive spurts. The Danish advantage has been to avoid a lot of backsliding and to reap the gains of ongoing compound returns. Mexico tends to have recessions that mirror its neighbor to the north, but the overall growth rate is much steadier than it was in the 1980s.

Fifty or 100 years from now, Mexico may be a huge surprise, economically speaking — without ever having been seen as a miracle. In the meantime, the Mexican discontent is likely to continue.

Texas business leaders are hopeful about future of U.S. trade relations with Mexico following the Mexican presidential election.
Mark Jones, political science professor at Rice University and chair of the school’s Latin American Studies program, predicts Andrés Manuel López Obrador, or AMLO, will be a very different president than his predecessor, Enrique Peña Nieto.

“Enrique Peña Nieto — his general goal was to not make waves with President Trump in the United States so that investment would continue. AMLO is a leftist and a populist and is likely to be far more combative with Trump,” Jones said.

And that concerns some Texas businesses who worry about the re-negotiation of the North American Free Trade Agreement, or NAFTA.
But Jeff Mosley, president and CEO of the Texas Association of Business, is optimistic about the future relationship between the Trump and theLópez Obrador administrations.
“Well, it could very well be that because both President Trump and President-elect [Lopez] Obrador draw from a populist vote base that they’ll have some very common interests and be more able to sit down and agree on the fundamentals of a NAFTA 2.0,” Mosley said.

But trade experts do not expect that to happen until well after López Obrador is sworn into office this December.

MEXICO CITY (AP) — Furious at spiraling corruption and violence, Mexican voters unleashed a political earthquake Sunday by electing a leftist firebrand as president and giving him a broad mandate to overthrow the political establishment and govern for the poor.

A late-night official quick count from electoral authorities forecast that Andres Manuel Lopez Obrador would win with between 53 percent and 53.8 percent of the vote, a remarkable margin not seen in the country for many years. A prominent exit poll predicted that his party allies were poised to score huge wins in the Senate and lower house, possibly absolute majorities in both.

Lopez Obrador, who campaigned on vows to transform Mexico and oust the “mafia of power” ruling the country, rode widespread voter anger and discontent with the governing Institutional Revolution Party, or PRI, of President Enrique Pena Nieto and had led opinion polls since the beginning of the campaign.

The PRI, which dominated Mexican politics for nearly the entire 20th century and recaptured the presidency in 2012, was set to suffer heavy losses not just for the presidency but in down-ballot races as well.

The proposed U.S. tariffs on car imports will have far reaching negative implications for the whole auto industry, according to Moody’s Investors Service.

The research firm said higher tariffs will cause problems across the car industry’s global supply chain.

“Tariffs on imported cars, parts would be broadly credit negative for industry,” Moody’s said in a note to clients Monday. “A 25% tariff on imported vehicles and parts would be negative for nearly every segment of the auto industry — carmakers, parts suppliers, car dealers, and transportation companies … Should any tariffs be levied, carmakers would need to absorb the cost to protect sales volumes while hurting profitability; increase prices to pass the tariff costs to customers, which could hurt sales; or a combination of both.”

President Donald Trump threatened a 20 percent tariff on auto imports from the European Union last week.

“Based on the Tariffs and Trade Barriers long placed on the U.S. & its great companies and workers by the European Union, if these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the U.S. Build them here!” he tweeted on Friday.

As part of tariffs expected to go online July 6, the administration also has put a 25 percent tariff on Chinese goods including autos.

Moody’s said American automakers will not be immune from the import tariffs. The firm noted both General Motors and Ford depend on imports from Mexico and Canada.

“Tariffs would be a negative for both Ford and GM. The burden would be greater for GM because it depends more on imports from Mexico and Canada to support US operations,” the report said. “In addition, a significant portion of GM’s high-margin trucks and SUVs are sourced from Mexico and Canada … Both manufacturers would need to absorb the cost of scaling back Mexican and Canadian production and moving some back to the US.”

Trump’s trade policy is already spurring companies to change their manufacturing plans.

Shares of Harley-Davidson plunged Monday after the iconic American motorcycle manufacturer said it will begin shifting some production overseas to offset the impact of retaliatory EU tariffs on certain U.S. goods.

As President Donald Trump escalates his threats to impose tariffs on cars imported to the United States, the new leader of the union’s General Motors Co. department is taking a hard line on the Detroit automaker’s decision to assemble in Mexico a new crossover carrying the revived Blazer nameplate.

Moments after GM revealed the 2019 Chevrolet Blazer at an event in Atlanta, United Auto Workers vice president Terry Dittes declared the news “disappointing to UAW families and communities across this country.”

“This is all happening while UAW-GM workers here in the U.S are laid off and unemployed,” Dittes said in the statement released Thursday night. “We in the UAW have always supported products manufactured and produced in the U.S. and will continue to do so as a part of the fabric of our union.”

GM says the decision to build the Blazer in Mexico was made at least two years ago, and that three plants were considered for Blazer production. Two of those plants were UAW shops in the U.S., but at the time the “future forecasts” saw those plants already at full capacity, a company spokesman said. The automaker declined to identify the plants in the U.S. it was considering for Blazer production.

Spokespeople for the Detroit automaker said the union likely knew of the production plans for the Blazer ahead of the Thursday announcement, but new leadership may not have been briefed.

Dittes took over the union’s GM department from Cindy Estrada after the UAW Constitutional Convention earlier this month. Both Dittes and Estrada were elected as part of new president Gary Jones’s ticket at the convention, and Estrada was reassigned to the Fiat Chrysler Automobiles NV department.

The elections come about a year before the Detroit Three and the UAW return to the negotiating table to draft new collective bargaining agreements in the fall of 2019.

Trump has taken an increasing harder line on punishing companies for manufacturing overseas. He has pushed for negotiating the terms of the North American Free Trade Agreement, declared tariffs on foreign steel and aluminum, and threatened punitive tariffs on vehicles from other countries, including Mexico and Canada.

On Friday morning, trade with Europe drew the ire of the president, who said in a tweet he wants a 20 percent tariff on all cars manufactured in Europe unless “Tariffs and Barriers are not soon broken down and removed.”

Trump’s tweet came hours after the European Union responded to barriers to imported steel and aluminum with tariffs on about $3.3 billion of American products. Those tariffs cover about 200 categories and target American-identified products including Harley-Davidson motorcycles, Levi Strauss jeans and bourbon.

Imposing tariffs on Europe would widen the president’s ongoing trade skirmishes. He has promised to impose 25 percent tariffs on $34 billion in Chinese goods beginning on July 6, a move that China has promised to counter — including a 25 percent tariff on U.S.-made cars.

MEXICO CITY (AP) — Mexico’s central bank has decided to raise its key interbank interest rate to 7.75 percent from 7.5 percent.

The bank cited uncertainty around negotiations on the North American Free Trade Agreement and Mexico’s upcoming July 1 elections.

The peso closed slightly stronger Thursday before the announcement, at 20.25 to $1. However, the peso has lost about 9 percent in value against the dollar over the last two months.

The Bank of Mexico said inflation decreased slightly in May to an annual rate of 4.51 percent. It was 4.55 percent in April.

Mexico’s top trade official is traveling to Japan this week as the Latin American nation seeks to diversify exports and investment amid an impasse in Nafta talks.

Economy Minister Ildefonso Guajardo said he still sees a high chance of a deal to update the North American Free Trade Agreement, but that the U.S., Canada and Mexico will need to show flexibility. The three sides will strongly engage next month, Guajardo was quoted by Reuters as saying on Monday in Tokyo, where he will meet Japanese officials and business leaders.

Nafta talks are on the back burner ahead of Mexico’s election on July 1, according to a person familiar with their timing, who asked not to be named citing private conversations. Uncertainty about the future of the trade deal increased this weekend after President Donald Trump clashed with Canadian Prime Minister Justin Trudeau just after a Group of Seven meeting ended in Canada.

Japan Ties

Guajardo will meet with Japan’s foreign minister as well as the minister of trade and commerce, his press office said in an emailed statement.

The world’s third-largest economy is the biggest market in the trade pact that succeeded the Trans-Pacific Partnership, which the U.S. abandoned a few days after Trump took office last year. The new deal, known as Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP, was agreed on by 11 nations in March and approved by the Mexican Senate in April.

Deepening ties with Japan and the other nations in the Pacific deal is part of Mexico’s push to diversify exports. Currently, 72 percent of the nation’s $435 billion in goods sold abroad every year go to the U.S. The nation also reached a deal in April to update its almost two-decade-old free-trade agreement with the European Union and is working to make inroads to China, Brazil and Argentina.

Japanese automakers including Nissan Motor Co., Honda Motor Co. and Toyota Motor Corp. have plants across Mexico, and the nation has received more than $14 billion in foreign direct investment from Japan over the past two decades. That makes Japan the biggest Asian investor in Mexico, according to data from Mexico’s economy ministry. Still, Japan bought only 1.3 percent of Mexican exports in 2017, about half as much as China and trailing the U.S, Canada and the European Union, according to data from the International Monetary Fund.

President Trump appears prepared to unravel 70 years of pain­staking effort that the United States has led to build an inter­national system of trade based on mutually accepted rules and principles.

Ever since an agreement on trade emerged in 1947 from the ashes of World War II, presidents of both parties have pushed this system as a way to strengthen alliances and promote the expansion of democracy and prosperity in Europe and Asia.

But with Trump’s decision last week to enact aluminum and steel tariffs against U.S. allies in Europe and North America, he is subverting previously agreed-­upon trade pacts. The result is a brewing trade war with Canada, Mexico and Europe, which are expressing shock and bitter frustration while enacting tariffs of their own on a bevy of American products.

The measures announced last week went beyond Trump’s previous actions, such as pulling out of the Trans-Pacific Partnership, a recently forged trade agreement among 12 nations, and his efforts to renegotiate the North American Free Trade Agreement with Mexico and Canada.

Now, he has imposed restrictions on aluminum and steel imports in the name of national security, even though almost all trade and national security analysts agree that it strains credulity to say it is risky to source metals from allies with whom the United States routinely shares sensitive intelligence information.

Veterans of trade policy worry that tensions will further escalate, putting existing trade agreements in peril and the future of the World Trade Organization, the group that the United States helped establish in 1995 to adjudicate the rules of global trade, in doubt.

“Trump’s actions create a feeling of chaos and lawlessness. America is no longer abiding by basic due process and commitments made to other nations,” said Jennifer Hillman, a former commissioner at the U.S. International Trade Commission.

Trump administration officials say the reaction from the rest of the world has been overblown. They say they are still eager to negotiate and they are just trying to stop a flood of cheap Chinese steel on the world market that has harmed American jobs and industry. Commerce Secretary Wilbur Ross is heading a delegation in Beijing this weekend to “discuss rebalancing” trade relations between China and the United States.

Trump has argued that he’s trying to get other countries, especially China, to play by the rules, and the president’s advisers say trade agreements negotiated in the 1990s are past due for an update that better reflects the current realities of the global economy.

“When you’re almost 800 Billion Dollars a year down on Trade, you can’t lose a Trade War!” the president tweeted Saturday, referring to the U.S. trade deficit in goods. (The overall trade deficit, which includes services, was $566 billion last year.) “The U.S. has been ripped off by other countries for years on Trade, time to get smart!” the tweet continued.

“We are the ones trying to save the rules-based trading system,” a senior administration official, who spoke on the condition of anonymity because they were not authorized to speak publicly, said in an interview Saturday. “Europe and Canada are cheating. They are giving subsidies to some of their industries and putting U.S. companies at an unfair disadvantage.”

The sudden U.S. hostility toward existing trade agreements comes at a fragile time. While the world economy has been chugging along, multiple countries are recoiling from the trend toward economic integration that has been continuing for decades.

Britain is in the process of exiting the European Union. With newly elected populists in power, Italy is dancing close to leaving the euro currency zone. And a leading candidate to be Mexico’s next president, Andrés Manuel López Obrador, is also a trade skeptic and may take an even more confrontational approach with Trump than the current president, Enrique Peña Nieto.

“The door is open to the system unraveling,” said Douglas Irwin, an economics professor at Dartmouth and author of “Clashing over Commerce: A History of U.S. Trade Policy.”

One reason for worry about things spinning out of control, trade experts say, is Trump’s apparent belief that he can use threats to coax concessions out of allies. While South Korea, Brazil and Australia have been more acquiescent, most of the world’s major powers have rejected his demands.

For example, last week Canadian Prime Minister Justin Trudeau revealed that he had rebuffed a request by Vice President Pence to resolve NAFTA negotiations with an agreement to revisit the terms of the pact every five years. That shattered hopes of Trump securing victory any time soon on NAFTA, and led the president to declare on Friday that he is considering abandoning the agreement altogether.

In the case of steel and aluminum, U.S. allies have refused to agree to quotas limiting their metals exports, thus forcing Trump to enact tariffs. Trump is acting more aggressively in part because a stable of cautious advisers has fallen away in recent months, and he has been emboldened by hard-line trade skeptics who have cast aside warnings about the economic pandemonium that could result from his confrontational behavior.

As a result, the United Kingdom, France, Germany, Mexico, Canada, Turkey and Japan have either begun or announced plans to launch countermeasures. They are also forging ahead with their own trade agreements without the United States, a situation that could put American companies at a disadvantage for years to come.

Numerous U.S. firms — and entire industries — are worried they could be caught in the crossfire of this escalating economic spat. Actions taken to fortify the steel industry could backfire by hurting other sectors dependent on inexpensive raw materials — possibly causing more job losses than jobs saved, economists say. And prices of many American goods — from cars to beer cans — could rise.

The cost of steel and aluminum tariffs for the average American family will be $210, estimates Mark Zandi, chief economist at Moody’s Analytics.

“This is basically a welfare scheme. You are taxing everyone in America to help a small number of people in the steel industry,” said Bart Oosterveld, director of the global business and economics program at the Atlantic Council.

Not every economist agrees, however, that the effect of the tariffs will be substantial.

“I don’t see a big risk to the global trading system. It’s not going to blow up the system,” said Peter Morici, a former chief economist at the U.S. International Trade Commission. “Trump wanted to send the Europeans a message on trade to get more concessions.”

Indeed, Trump’s tariffs so far are on a relatively small scale, hitting about $41 billion worth of steel and aluminum imports. But he has threatened to go after European-made autos next.

The bigger issue is a political one: the aggressive imposition of tariffs on an unprecedentedly wide variety of U.S. allies, and the use of national security as the justification for doing it.

As a result, America’s longtime partners are starting to view Trump’s move as a sea change in U.S. policy. Trudeau called the action “totally unacceptable.”

Cecilia Malmström, the European Union’s trade commissioner, said, “I would not use the term ‘trade war’ because it has a psychological effect.” But she added: “The U.S. is playing a dangerous game here.”

“This will have an economic bite, and it will last a long time,” said Adam Posen, president of the Peterson Institute for International Economics. “It will be hard to establish trust in the U.S. again, and all the uncertainty will drive down investment and productivity.”

Under WTO rules, the national security tariff is supposed to be wielded only in times of war or when there is a direct threat to a country. Trump’s team is arguing that any nation should be able to determine on its own when its national security is at risk and impose tariffs when it wants, a major shift that opens the door to any country erecting trade barriers whenever it wants.

“To me, it’s unequivocal that these U.S. tariffs are a violation of America’s WTO obligations,” said Hillman, a Georgetown Law professor. “Under the WTO, the U.S. committed to not discriminating among members of the WTO, so the U.S. can’t charge a 10 percent tariff on Canada but not Argentina.”

Past presidents from both parties worked hard to get other nations to join the WTO and adhere to a system that barred the arbitrary use of tariffs. Now the United States is facing multiple challenges at the WTO for inappropriate conduct.

If the United States loses such cases, Trump might simply ignore the rulings or even pull out of the organization. His administration has already blocked new appointments to the WTO’s appellate body, creating a backlog of trade disputes.

Some economists say that Trump is correct that trade has had some downsides that policymakers should address. But his explosive approach is misguided, they say.

“It is possible to address the negative consequences of liberalizing trade without destroying the global trade system, which has brought so much prosperity to the world,” said Minouche Shafik, director of the London School of Economics and recently deputy governor of the Bank of England.

While the lead negotiators for Canada and the U.S. were in intense meetings in Washington trying to find a breakthrough in the vexing NAFTA auto industry regulations, Mexico’s ambassador to Canada, Dionisio Pérez Jácome, was holding a series of meetings in Winnipeg spreading the word that Mexico is committed to free trade now and in the future.

In a speech to the Manitoba Chambers of Commerce on Tuesday morning, Jácome did his best to make the point that Mexico believes that a renegotiated NAFTA has to be one that should be truly trilateral that benefits each of the countries.

“We will continue to engage in negotiations in a constructive manner always keeping in mind that it should benefit all three countries,” Jácome said.

In addition to the auto sector, top of the agenda for Canada’s foreign affairs minister, Chrystia Freeland, on Tuesday was negotiating a further reprieve from potentially crippling U.S. tariffs on imports of steel and aluminum that expires on Friday, an issue she says is separate from the NAFTA talks.

That’s just one more deadline for trade negotiators to deal with on top of the looming national election in Mexico on July 1 and mid-term elections in the U.S. in November adding to the sense that negotiators are on the clock to complete the new NAFTA deal fast.

But Jácome stressed that it was more important for Mexico to achieve a good deal rather than a quick one.

Last week Mexican Economy Minister Ildefonso Guajardo said he believes there is a 40 per cent chance of the deal getting done before his country’s election.

“We are in no position to exchange quality for speed,” Jácome said.

There is no doubt that the NAFTA era has had a significant impact on Mexican-Canadian trade. Jácome pointed out that since the deal was signed in 1994 trade between the two North American countries has increased nine-fold.

In his first visit to Winnipeg — which Jácome said was at least partly to bestow the Order of the Aztec Eagle, the highest Mexican order awarded to foreigners, to Jim Downey, the long-time honorary consul to Mexico — he met with the premier, the mayor and several business groups.

“They were very productive meetings,” he said. “The business community in Mexico and Canada have been getting to know each other better. They are doing more trade and there are good opportunities to compliment each other. I believe we are on track to continue increasing trade.”

Imports from Mexico to Manitoba are almost triple the size of exports from here to there, but the pork sector has perhaps made the strongest inroads. This province is a major producer of Canadian pork and Mexico is an enthusiastic importer. It’s now Canada’s fourth largest export destination for pork and last year Manitoba represented about 43 per cent of the total, worth about $83 million.

Both Maple Leaf Foods and HyLife Foods, the province’s two largest pork processors, export to Mexico. HyLife has a plant with 200 workers north of Mexico City where it makes sausage for the Mexican market using Manitoba-produced pork products.

“The big thing about NAFTA, as the ambassador spoke about, is that it opened up the Mexican market for Canadian produced pork so that now Mexico is a major market for Canadian pork,” said Andrew Dickson, general manager of Manitoba Pork. “They are currently getting most of their pork from the U.S. But they wanted to diversify the sources of supply.”

Jácome spoke about how free trade — and not just with Canada and the U.S. but with more than 48 other countries as well — has transformed the Mexican economy and allowed it to diversify.

Mariette Mulaire, the CEO of World Trade Centre Winnipeg, said the desire to expand its trading perspective is one of the many examples of how the two countries share similar goals.

“There is absolutely an opportunity for Canada and Mexico to work together to develop even stronger links,” she said. “With the uncertainties around NAFTA (created by U.S. President Donald Trump’s repeated references to it being “the worst deal”)… we share the same kind of concerns.”

The Trump administration is considering new tariffs on imported cars in a move that trade analysts said was designed to put pressure on Mexico during the final stages of negotiations for a new North American trade deal.

Officials may cite national security grounds to justify a 25% tariff on imported vehicles, a senior administration official said, speaking on the condition of anonymity to discuss internal deliberations. President Trump used the same provision of U.S. trade law in March when he called for tariffs on foreign-made steel and aluminum.

An announcement of a formal investigation into the purported need for such industrial protection could come as soon as Wednesday evening, one industry executive said. Shares of European carmakers fell more than 1% on the news.

Negotiators for the United States, Mexico and Canada remain deadlocked over rules for granting duty-free status to vehicles under a new North American trade deal.The talks have been underway for more than nine months and appear likely to continue into 2019, Treasury Secretary Steven T. Mnuchin said this week.

The threat to impose an import tax on cars was seen as an attempt to press Mexican officials to accept a U.S. demand for a higher percentage of auto content to be made in American factories.

Talks over a replacement for the 1994 North American Free Trade Agreement among the United States, Mexico and Canada have made limited progress.

Negotiators remain divided on a host of contentious U.S. proposals, including a provision that would require the deal to be formally renewed every five years.

The proposed import tax was seen as an additional pressure point in the negotiations, with Mexico and Canada already scheduled to lose their exemption from Trump’s metals tariffs in little more than a week.

“This has been discussed for some time, which makes me suspect that this is being leaked to put pressure on Mexico during NAFTA and on other parties seeking steel and aluminum exemptions,” said attorney Dan Ujczo of Dickinson Wright.

Initial reaction to the idea of an import tax on cars based on national security needs was unfriendly, with one veteran trade lawyer saying it would prompt “pant-wetting laughter — followed by retaliation” among U.S. trading partners.

Mexico in the past has threatened to retaliate against U.S. trade actions by curtailing purchases of American farm products. Mexicans last year purchased almost $19 billion of American corn, dairy and soybean products.

The provisions of a 1962 trade law, known as Section 232, allow the president to restrict imports that threaten “to impair the national security.”

Under the law, the Commerce Department conducts a months-long review and reports its conclusions to the president. He then determines the final tariff figure, if any.

William Reinsch, a former Clinton administration trade official, said the proposal broke with traditional legal interpretations and would disrupt industry supply chains and probably lead to job losses in the United States and elsewhere.

“Arguing that passenger cars are a national security issue doesn’t pass the laugh test,” he said. “We don’t have a shortage; our companies are not currently in trouble; and there are plenty of alternative sources from reliable allied suppliers. Pursuing that case would make a mockery of the provision.”

A vehicles tariff also would hurt U.S. automakers with operations in Mexico and Canada and other places. The United States imported $192 billion in passenger vehicles last year, with Mexico being the leading source, followed by Canada, Japan and Germany.
An industry group representing several foreign carmakers said the domestic industry did not need protection from competition.
“If these reports are true, it’s a bad day for American consumers,” said John Bozzella, chief executive of Global Automakers, which represents several foreign carmakers.

“To our knowledge, no one is asking for this protection. This path leads inevitably to fewer choices and higher prices for cars and trucks in America.”

The auto industry has been a focus of the president’s. He has complained about the difficulties American carmakers face selling their products abroad, raising the subject with Asian and European allies.

In March, he threatened to hit European carmakers with tariffs if the European Union did not lower barriers to U.S. vehicles. The EU adds 10% to the cost of imported American models, while the United States imposes a levy of 2.5% on most imported cars and 25% on most pickups.

German officials have grown frustrated trying to convince Trump that Germans don’t want to buy from American companies, which specialize in large sport-utility vehicles rather than smaller cars more suited to European lifestyles.

Trump has obsessed over German cars above all others, according to a senior White House official familiar with the talks. Though the president is now driven in an armored black Cadillac limousine known as “the beast,” he has owned various foreign models, including Maybach, Rolls Royce, Mercedes-Benz and McLaren.

The president appears to have previewed the internal debate with an early-morning tweet: “There will be big news coming soon for our great American ­Autoworkers. After many decades of losing your jobs to other countries, you have waited long enough!”
The proposal was first reported by the Wall Street Journal.