President Trump says foreign cars are a national security threat. Will Congress stop him in before it’s too late?

President Trump says foreign cars are a national security threat. Will Congress stop him in before it’s too late?

President Trump says foreign cars are a national security threat. Will Congress stop him in before it’s too late?

But their initial reaction overlooked a key implication of the move: Included in Trump’s announcement was his first formal assertion that imported cars and parts are in fact a national security threat.

Early relief quickly faded as realization set in that Trump had actually moved closer to wielding the tariffs down the road if he is unsuccessful in using them as leverage in trade talks with the European Union and Japan. Trump isn’t so much delaying auto tariffs as he is holding a gun to the global auto industry’s head and reserving his right to pull the trigger.

For lawmakers who believe auto tariffs would destroy global supply chains, harm American workers and raise costs for consumers, the best-case scenario has now passed. Trump could have announced before the Saturday deadline, as he once remarked on Fox News, that foreign automobiles are not a national security threat.

Instead, the President concurred with the findings included in Commerce Secretary Wilbur Ross’s still confidential report, agreeing that certain imported cars and car parts “threaten to impair the national security of the United States.”

Trump argued the “American-owned” auto industry contributes technological innovation to the defense sector, and that imports limit research and development spending in the US.

US lifts steel and aluminum tariffs on Canada and Mexico

In his Friday announcement, Trump directed US Trade Representative Robert Lighthizer to conduct negotiations over a 180-day period with the EU and Japan, as well as any other countries he deems necessary, to address the perceived threat posed by foreign cars and auto parts.

But at the end of those six months, if Trump isn’t happy with the negotiations, he will be just as empowered to slap his threatened tariffs of 25 percent on cars coming into the US.

On Thursday, some congressional Republicans who oppose potential auto tariffs began to grapple with the serious implications of the decision, realizing the delay, while offering temporary solace amid Trump’s escalating trade war with China, was not in their favor.

“The American economy has dodged a bullet,” Pennsylvania Republican Pat Toomey said in a statement to CNN. “However, the danger remains that these tariffs, pursuant to a Cold War-era trade law known as Section 232, will be levied in six months.”

Toomey also criticized Trump’s reasoning for labeling car imports as a threat.

“Toyota Corollas and Volkswagen Beetles do not pose a national security threat,” said Toomey.

Can Congress fight back?

Since Trump’s steel and aluminum tariffs went into effect last summer, lawmakers have been considering how to limit the President’s unilateral power to wield national security tariffs. Trump’s decision Friday likely adds urgency to that effort, and effectively gives lawmakers six months to find consensus on an issue that has deeply divided the GOP.

Senate Finance Committee Chairman Chuck Grassley, a Republican from Iowa, has been drafting legislation to limit presidential authority to impose national security tariffs without congressional approval. He says he is now looking for ways to combine two vastly different bills, one from Toomey, the other from Ohio Republican Sen. Rob Portman, into one piece of legislation that he hopes could have enough support to override a potential presidential veto.

Toomey’s bill is far more aggressive, and seeks to require congressional approval for all 232 tariffs — even those that have already been deployed. It would give jurisdiction to the Defense Department rather than the Commerce Department, and set a more limited definition of goods that can be considered national security threats.

Portman has argued for a more scaled-back approach, which would also shift authority on the issue to the Defense Department.

Grassley’s compromise legislation, on the other hand would allow the administration to implement tariffs for a certain time period, after which they would need congressional approval for an extension.

There are deep disagreements between Toomey and Portman on the congressional approval requirement, and Grassley’s suggestion hasn’t earned Portman’s support yet. Congress would also have to overwhelmingly agree to the legislation to override a looming veto threat from Trump.

Progress has been slow.

“We haven’t negotiated it yet,” Grassley told CNN on Thursday. “There’s an urgency for it, absolutely. Not because of the present tariff situation, but because the Congress delegated too much authority.”

Meanwhile Grassley and other top lawmakers want the White House to release the confidential Section 232 report prepared by the Commerce Department justifying the auto decision, but to no avail.

“I have serious questions about the legitimacy of using national security as a basis to impose tariffs on cars and car parts,” Senate Finance Committee Chairman Chuck Grassley said in a statement after Trump announced the delay.

It is unclear when the White House will release the document. Technically it’s required to, though there’s no deadline governing how quickly. The President does have to issue a statement explaining his reasoning to Congress 30 days from Friday’s determination, according to the law.

Threats to foreign auto plants

Tariffs on cars from Japan and Europe would be particularly painful for conservative southern states with foreign auto plants. Over the past two decades, companies including Toyota, BMW, Volvo, Honda and Hyundai have built large assembly plants across the southeast in states such as South Carolina, Tennessee, Kentucky and Alabama.

Toyota issued a critical statement following Trump’s announcement.

“Today’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.”

Trump's trade war puts Southern Republicans in an awkward spot

Republicans are unlikely to side with Trump on his claim that cars produced at those plants threaten national security.

“That’s a stretch,” Texas Sen. John Cornyn told CNN of Trump’s assertion. “The whole idea of tariffs as policy is controversial. Tariffs as a way to get people to the negotiating table is not particularly controversial, but we’ll have to see how it develops.”

For now, Republicans say they hope Trump can strike deals with the EU and Japan to avert disaster, but they recognize talks may be an uphill climb.

Members of Congress are more optimistic for a deal with Japan than they are with the EU, which is known for being a tough negotiating partner.

EU officials have prepared to target $23 billion in American goods with retaliatory tariffs if Trump follows through on his threat. They have also held firm against the White House’s demands for a broader trade agreement to open up European markets to American agriculture. Consider Lighthizer’s assessment in March that talks between the United States and the EU were at “a complete stalemate” — before negotiations had even begun.
EU Trade Commissioner Cecilia Malmstrom tweeted on Friday that she would discuss the decision with Lighthizer next week in Paris, “But we completely reject the notion that our car exports are a national security threat.”

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President Trump issues order to ban foreign telecom gear that poses security risk

President Trump issues order to ban foreign telecom gear that poses security risk

President Trump issues order to ban foreign telecom gear that poses security risk

The decision risks escalating tensions with China as the two nations clash over whether Huawei — the world’s largest provider of telecommunications equipment — poses a spying risk to Western infrastructure networks.

White House officials declined to identify China and Huawei as the intended target of the executive order.

However, shortly after the order was issued, the Commerce Department formally added Huawei to the list of companies the U.S. government considers to be undermining American interests. By adding Huawei to the so-called Entity List, the Trump administration will ensure Huawei will be covered by the new executive order.

Senior administration officials told reporters that the document reflects Trump’s commitment to keeping the nation’s networks secure from foreign adversaries. And other US officials have openly lobbied allies not to use Huawei gear, arguing that the company’s products could offer the Chinese government a way to spy on sensitive US communications.

The Trump administration will develop more specific rules over the next 150 days, according to one senior official, and US businesses will be invited to offer feedback.

Senators question how to roll out 5G without Chinese technology

Huawei said banning it from the United States would ultimately hurt American businesses and consumers, and hamper US efforts to develop 5G technology.

“Restricting Huawei from doing business in the US will not make the US more secure or stronger; instead, this will only serve to limit the US to inferior yet more expensive alternatives, leaving the US lagging behind in 5G deployment,” the company said in a statement.

The proposal could prove costly to small and rural wireless carriers, many of whom use equipment from Huawei due to its lower cost compared to the next largest competitors, Europe’s Nokia and Ericsson. Most large carriers don’t use Huawei equipment.

While the executive order would apply to past purchases of telecom equipment, officials declined to say whether the government would help carriers pay to remove the gear from their networks — or what the punishment could be for companies that violate the new policy.

The order left American telecom companies that rely on foreign-made equipment wondering how it would be implemented.

“We’ll just have to see what it is and we’ll have a definite reaction one way or another,” said Craig Gates, the CEO of Triangle, a small network that uses Huawei gear.

He said that members of various trade associations have already been discussing whether there would be federal help to offset the costs of taking out offending equipment.

“Because when all this equipment went in there was no talk of these issues,” he said. “Would there be help to replace it?”

CNN’s Steven Jiang contributed to this report.

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India is building a city from scratch to attract foreign investors

India is building a city from scratch to attract foreign investors

India is building a city from scratch to attract foreign investors

Gradually mushrooming on an otherwise barren 886-acre parcel of land in Gujarat — Prime Minister Narendra Modi’s home state — is a small collection of buildings that India hopes will one day rival financial centers like Singapore, Dubai and Hong Kong.

It’s called Gujarat International Finance-Tec City, or GIFT City.

“Except for the fact that we are not sitting in Singapore and GIFT City is not Singapore, I think from a business perspective we have everything that is required,” Ajay Pandey, the city’s CEO, told CNN.

Two stock exchanges were established in the city last year, and government exemptions recently made trading virtually tax-free. The city will also have its own financial regulator, part of an effort to reduce red tape and bureaucracy faced by foreign investors.

“Eventually GIFT city should become a vehicle or a place for people from across India like Hong Kong has acted for China in the last 30 or 40 years,” said Bombay Stock Exchange CEO Ashishkumar Chauhan.

“We think the India INX will provide a platform to corporates and investors from abroad to meet, trade and invest in the growth story of India,” he added.

Investors are taking notice — when trading started 15 months ago, the exchange hosted daily trading worth around $1 million. On Monday, that number crossed $500 million for the first time.

“The moment you hit close to half a billion dollars, that’s the time that some of the big names of the world — JP Morgan (JPM), Morgan Stanley (MS) and others — begin to step in,” said Pandey. “Things are beginning to roll.”

Next on the agenda? Getting people to actually live there.

The city currently consists of just a handful of structures — three large office buildings to which workers are bussed from surrounding areas, a school and a data center. Its first residences will be ready by May, and a four-tower World Trade Center complex is expected to be completed in the next two years.

Transportation links are good: Ahmedabad airport is only a 25 minute drive.

GIFT City has already attracted close to $2 billion in real estate investment, and Pandey expects that number could eventually rise to nearly $11 billion.

The CEO admits that competing with Singapore or Hong Kong is still a long way off.

“Those cities were not built overnight… we have a lot of catching up to do,” he said. “If you look at it, the right set of building blocks are being put in place.”

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