Trump threatens 20 percent tariff on imported European cars

Gladys Abbott
June 24, 2018

Within hours, Trump responded with a threat to impose a 20 percent tariff on cars imported from the European Union.

Trump made the announcement in a Twitter message on Friday morning.

"You're already going to see prices going up incrementally as a result of the steel and aluminium tariffs in the auto sector", said Lusk, whose group represents foreign-branded auto dealers in the US.

The European Commission said its retaliatory tariffs are based on the value of its steel and aluminium exports affected by the USA measures, which are worth €6.4bn.

Right now, Europe tacks on a 10 percent tariff on cars from the USA, while the US imposes a 2.5 percent tariff on European-made cars and 25 percent on light trucks.

President Donald Trump is threatening to slap a 20 percent tariff on cars from the European Union. By contrast, BMW only imported 202,000 cars to the United States from its German plants.

While Germany imported the fifth-most vehicles into the USA last year, the home of Europe's biggest economy punches above its weight in attracting Trump's ire.

Trump's latest threat to extend tariff measures on autos, using the same "national security" provision as was employed in the case of steel and aluminium, would provoke a much bigger conflict, especially with Germany.

Trump had directed the Commerce Deparment to launch an investigation into imported autos in May, similar to the procedure that led to the steel and aluminum tariffs.

Trump's message comes two days after Commerce Secretary Wilbur Ross said that no decision has been made about tariffs on automobiles, according to CNBC.

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The threat comes after Trump directed the Commerce Department to launch an investigation into whether imports of foreign autos were a risk to US national security and should be subject to tariffs or other trade restrictions. "The fundamental reality is that talk is cheap", Navarro had told reporters on a conference call, saying China "may have underestimated the strong resolve of President Donald J. Trump". China, India and Turkey have already hit back with their own tariffs on United States imports. Chinese reprisals have hit American farmers already. "We should end the escalation", he said in the comments published on Saturday. The tweet sent shares of European automakers, including BMW and Volkswagen, lower.

The EU said on Wednesday that its retaliatory tariffs on a list of USA products in response to the US tariffs on steel and aluminum will come into effect on Friday. "Automakers support reducing trade barriers across the board".

German auto industry association VDA said Germany exported 657,000 cars to North America, 7 percent less than a year earlier, and 200,000 fewer cars than in 2013.

The EU sent nearly $50bn in vehicles and auto parts to the USA previous year, with roughly half coming from Germany.

New auto tariffs would be a massive escalation of the already intense trade fight between the USA and Europe.

It is hard for the White House to unilaterally impose tariffs without input from Congress, but Trump has found several ways to do it this year.

Republican lawmakers and business groups have opposed higher auto tariffs.

The Auto Alliance has said it was "confident that vehicle imports do not pose a national security risk".

It's the latest in a string of outbursts by Trump in his frustration at trade tarriffs, having expressed disappointment previously at the disparity between European vehicle sales in the U.S., and United States auto sales in the EU. Prior to the meeting, Trump reportedly told French President Emmanuel Macron during a recent state visit that he wants to get to the point where there will be no Mercedes-Benz models driving down New York's upscale Fifth Avenue.

Other reports by LeisureTravelAid

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