Trump in tariff threat to EU cars
The trade war between the U.S. and the rest of the world is nothing more than a war of words just yet; but it now also includes the threat of tariffs raised on European cars imported into the States.
The world was rudely awakened to the threat of a global trade war last week, when U.S. president Donald Trump tweeted his intention to slap tariffs of 25% on foreign-produced steel and 10% on aluminium imported into the U.S., for reasons of “national security”.
Despite pleas from Canada (America’s biggest foreign supplier of steel and aluminium), the UK (despite still being a part of the EU) and others, Trump’s trade advisor Peter Navarro has made it clear there would be “no exemptions” to the measure, aimed at bolstering America’s domestic steel and aluminium industry.
Reacting to the U.S. threat, the European Union announced that it would prepare retaliatory measures, with European Commission president Jean-Claude Juncker referring to blue jeans, bourbon and Harley-Davidson as some of the iconic American products the EU could raise tariffs on.
Forging what one top EU official called a “harsh and clear reaction from Brussels”, the EU reportedly has already drawn up a list of countermeasures to the tune of €2.8 billion, comprising tariffs equally divided between three categories of goods: steel and aluminium, agricultural products, and others. Pending Washington’s own detailed tariff proposals, the EU list could be published as early as Wednesday.
Responding to the EU reaction, Mr Trump over the weekend escalated the looming global trade war by threatening to slap punitive tariffs on European car imports. “If the E.U. wants to further increase their already massive tariffs and barriers on U.S. companies doing business there, we will simply apply a Tax on their Cars which freely pour into the U.S.,” Trump tweeted on Saturday. “They make it impossible for our cars (and more) to sell there. Big trade imbalance!”
The news that was received with “great concern” by the German automotive industry association. VDA president Bernhard Mattes warned that such a move would “create only losers, on all sides”, going on to say that “a trade war between the U.S. and Europe must be avoided at all costs.”
German economy minister Brigitte Zypries commented that “president Trump wants to play a game that no one can win. To raise ever more tariffs on ever more products can ultimately lead to a situation where decades of tariff reduction, free trade and prosperity are in danger”. She urged him to reconsider his tariff proposals.
Meanwhile, it remains unclear whether any actual tariffs will be imposed by the U.S., or who will be exempt. Senior Republican Congressman Kevin Brady said that “all fairly traded steel and aluminium” should be excluded from punitive tariffs, which could be taken to mean any steel produced by Mexico, Canada and the EU.
Trump himself remains sanguine about the prospect of a global trade war, tweeting that trade wars are good and “easy to win”.
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