US President Donald Trump today threatened to slap a 20 per cent duty on all cars imported from Europe unless the European Union removed its trade barriers and tariffs on dozens of American products which took effect.
European Union trade commissioner Cecilia Malmstrom adresses a news conference on the US tariffs on steel and aluminium in Brussels on June 1.
The goods targeted include typical American products such as bourbon, peanut butter and orange juice, in a way that seems designed to create political pressure on President Donald Trump and senior U.S. politicians.
U.S. president Donald Trump threatens 20 per cent tariffs on European Union cars.
Last month Trump instructed his Commerce Department to begin a national security investigation that would provide the legal underpinning for new tariffs on cars.
According to Reuters, the European Union now imposes a 10 percent tariff on imported us cars, while the USA now imposes a 2.5 percent tariff on imported passenger cars, and a 25 percent tariff on pickup trucks imported from the EU. Countries including, EU, Canada, Mexico had then announced retaliatory measures against USA steel and aluminium tariffs, stating that the U.S.is violating the rules of the World Trade Organization (WTO). "Any attempt to increase taxes on German cars would have a larger effect on BMW and Mercedes, and a lower effect on Volkswagen, as most of the sales of the premium brands correspond to imported models (63% for Mercedes and 64% for BMW)".
German automakers Mercedes, BMW, and Volkswagen all have plants in southern states and directly employ more than 20,000 USA workers between them, primarily at those factories.
The European Autos Stocks Index fell sharply after Mr. Trump's tweet and closed down 0.5%. Shares of US automakers Ford Motor Co. and General Motors Co. fell immediately after Trump's tweet but rebounded and closed higher.
"This first set of exclusions confirm what we have said from the beginning - that we are taking a balanced approach that accounts for the needs of downstream industries while also recognizing the threatened impairment of our national security caused by imports", Commerce Secretary Wilbur Ross said in a statement.
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The Washington trade association for BMW, Daimler and Volkswagen's operations in the USA warned consumers will be harmed by higher tariffs. According to the Peterson Institute for International Economics, a 25% tariff on imported autos to the U.S. would result in the loss of 195,000 United States auto workers' jobs. China, India and Turkey have already hit back with their own tariffs on USA imports.
Wednesday, Cecilia Malmström, European Union commissioner for trade, said although the bloc didn't want to tax the United States, they had no choice. The so-called "Chicken Tax" on light trucks has effectively isolated the U.S.in truck makes and models and required automakers to invest billions into production facilities in North America to produce the trucks and skirt the steep tariff. Duties at this level could be expected roughly to reduce USA imports of vehicle and auto parts in half.
"BMW's largest plant in the world is based in Spartanburg, South Carolina, and export cars from the United States to other countries".
The International Monetary Fund (IMF) said Thursday that the Trump administration's new tariffs against imports threaten to undermine the rules-based global trading system and damage the global economy.
Tariffs on vehicle imports would add to an array of trade wars Trump has started, saying he aims to create United States jobs and protect domestic industries. He charged that a succession of poorly negotiated accords - including the North American Free Trade Agreement and the pact that admitted China into the World Trade Organization - put American manufacturers at an unfair disadvantage and destroyed millions of USA factory jobs.
Trump has repeatedly issued warnings to U.S. trade partners across the world about reducing the trade deficit.
"I want all the cars made in the United States", Cohn told The Washington Post.
"Changes in trade policy could cause us to have to question the outlook, the chairman of the US Federal Reserve Jerome Powell said during a panel discussion". American companies which have huge investments amounting to more than $200 billion in China's fast-growing market, will obviously be hurt. A 10 percent tariff was also slapped on USA -made playing cards. Last year, £171 billion worth of cars were exported from the European Union, with the United States accounting for 25% of them.