Donald Trump has suggested he would impose tariffs on car imports from specific companies who produce in Mexico and export to the United States. Ford, GM, and Toyota have all been mentioned. Here is his Toyota tweet:
Toyota Motor said will build a new plant in Baja, Mexico, to build Corolla cars for U.S. NO WAY! Build plant in U.S. or pay big border tax.
It's not clear to what extent he is serious about this, and various political and legal hurdles probably mean it would never happen. Nevertheless, the idea is out there, and leads to an interesting legal question. Obviously, an actual tariff applied in these circumstances would almost certainly violate trade agreements. But what about the threats themselves? If they cause companies to abandon their investment plans in Mexico, is there a WTO legal claim?
I'm not sure I can think of a convincing claim of violation, but how about a non-violation nullification or impairment claim? Here is how the Film panel explained the legal standard:
10.41 ... The text of Article XXIII:1(b) establishes three elements that a complaining party must demonstrate in order to make out a cognizable claim under Article XXIII:1(b): (1) application of a measure by a WTO Member; (2) a benefit accruing under the relevant agreement; and (3) nullification or impairment of the benefit as the result of the application of the measure.
If the benefit of a tariff concession is supposed to be increased trade (more precisely, "legitimate expectations of improved market-access opportunities arising out of relevant tariff concessions"), which will be accompanied by increased investment to produce more traded goods, and the threat of raising the tariff undermines the investment and the resulting trade, couldn't it be argued that this tariff threat is a measure that has nullified or impaired the benefit of the concession?
(Yes, there's the problem of non-violation offering a very limited remedy, but maybe there is some political value in such a complaint.)
