Published: Sun, June 24, 2018
Money | By Armando Alvarado

Donald Trump threatens 20% tariff on European Union cars, targeting Germany

Donald Trump threatens 20% tariff on European Union cars, targeting Germany

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

"It is also bad for USA economically and with jobs", Trump had rued. Trump initially exempted the EU from the metal tariffs, but let the temporary reprieve expire after negotiations with the Europeans fell apart.

President TrumpDonald John TrumpCNN analyst Kirsten Powers: Melania's jacket should read "Let them eat cake" CNN's Cuomo confronts Lewandowski over "womp womp" remark Sessions says Federal Bureau of Investigation agent Peter Strzok no longer has his security clearance MORE on Friday threatened to place a 20 percent tariff on all European cars entering the United States.

On May 23, Trump instructed Commerce Secretary Wilbur Ross to investigate whether or not auto imports "threaten to impair the national security".

"'The people of Germany are turning against their leadership as migration is rocking the already tenuous Berlin coalition", Trump tweeted earlier this week.

The EU has today introduced retaliatory tariffs on €2.8 billion (US$3.3bn) worth of United States products - including American whiskey - in response to president Donald Trump's tax hikes on imported aluminium and steel. Ross told lawmakers that "no decision" had been made regarding tariffs and that the process was in the "early stages".

He said Thursday that the Commerce Department hopes to complete the investigation by the end of July or August.

President Donald Trump and China's President Xi Jinping arrive at a state dinner at the Great Hall of the People on November 9, 2017, in Beijing, China.

In turn, China said it would slap the USA with tariffs on $50 billion worth of United States imports starting in July.

The E.U.'s tariffs are not the first retaliation in the escalating global trade war started by the Trump administration: Mexico and China have already launched retaliatory tariffs of their own, while Canada and Japan are soon likely to follow suit. "However, the unilateral and unjustified decision of the U.S.to impose steel and aluminum tariffs on the EU means that we are left with no other choice", said EU Trade Commissioner Cecilia Malmstrom.

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In total, the U.S. imported over $43 billion worth of vehicles for people transportation in 2017.

Mr Trump imposed tariffs of 25% on European Union steel and 10% on aluminium on June 1.

Duties of 25 per cent "could be expected roughly to reduce U.S. imports of auto and vehicle parts in half", the European Commission wrote in a memo obtained by Bloomberg. In September, Mercedes' parent company announced that it was investing $1 billion in its Alabama plant.

The risk is becoming more real, said Jeff Schuster, senior vice president of forecasting at LMC Automotive, before Trump's latest salvo. That amounts to almost 2 percent of the workforce for America's auto and auto parts industries. 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.

The president told the European carmakers to "Build them here!" - but many European carmakers build a large percentage of their vehicles in the USA already, according to the EU. 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 US factory jobs.

In a statement following Trump's tweet, VDA said that the president's tariff threat was counterproductive.

"This is what we are doing on climate change or on nuclear weapons in Iran", Juncker said.

Trump has repeatedly singled out German auto imports to the United States for criticism.

The move could also prompt a response from the European Union that would damage USA automakers.

German-built vehicles exported to the United States fell 10 percent to 494,000 vehicles, while German automakers produced 804,000 vehicles in the United States past year. Ford Motor shares went into the red and were down 0.5%, while General Motors shares were off 0.3%.

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