The Trump administration is considering new tariffs on imported cars in a move that trade analysts said was created to put pressure on Mexico during the final stages of negotiations for a new North American trade deal.
Trump has already imposed tariffs of 25 percent on steel and 10 percent on aluminum imports under the provision, which gives the president broad powers to slap duties on foreign goods that are considered a threat to national security.
The news comes the same day that President Donald Trump teased "big news coming soon" for American auto workers.
Economists worry that increased trade protections, like tariffs, could spark trade wars and harm the U.S. economy.
The report caused U.S. carmaker shares to jump and hit those of overseas companies like Toyota Motor with its New York-traded shares falling 0.67 per cent.
What Happened: Citing national security reasons, U.S. President Donald Trump's administration is considering new tariffs of up to 25 percent on imported vehicles, The Wall Street Journal reported May 23.
Section 232 allows the president to impose trade restrictionson national security grounds. Any tariffs would after a Commerce Department investigation.
Mr. Trump has repeatedly floated the idea of tariffs on auto imports in meetings. It is unclearif the new tariffs would focus on certain countries or all importedvehicles.
The threat of auto tariffs may put pressure on Mexico and Canada as they negotiate a successor to the North American Free Trade Agreement.
U.S. cars sold in the European Union are hit with 10 percent duties, while the United States imposes just 2.5 percent on cars from the EU. Mexico is resisting the change, creating a major impasse. The United States is the second-biggest export destination for German auto manufacturers after China, while vehicles and car parts are Germany's biggest source of export income.
In a separate statement released by the White House, Trump said he had "instructed" Ross to "consider" kicking off the probe.
He tells reporters on the South Lawn at the White House that "you'll be seeing very soon what I'm talking about". He said America's neighbors have been "very spoiled because nobody's done this but I will tell you that what they ask for is not fair".
In March, he threatened to hit European carmakers with tariffs if the European Union did not lower barriers to USA vehicles.
During the campaign, Trump also promised to revive a shrinking manufacturing base in the U.S. Trump's tweets today gave optimism that a deal was near on NAFTA.