Trump is Talking Tariffs Again, Takes Aim at European Cars
President Donald Trump amplified his earlier threat of a global trade war this weekend by suggesting he would impose a tax on European cars if the EU countered his proposed steel and aluminum tariffs. On Thursday, Trump called for a 25 precent import tariff for steel and a 10 percent fee on aluminum in the hopes it would bolster those industries domestically. Europe responded by threatening a tax on imported bourbon, blue jeans, and American motorcycles. Apple pie and baseball were not mentioned, but you get the idea.
European Union officials clearly wanted to send a message to the president to back down. Instead, he came back even harder in a tweet from Saturday. “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.,” he wrote. “They make it impossible for our cars (and more) to sell there. Big trade imbalance!”
The United States currently imports over 1.2 million European cars from Europe, according to the European Automobile Manufacturers Association. The overwhelming majority of these vehicles from from German automakers under BMW Group, Volkswagen Group, and Daimler. Trump advisor Peter Navarro has repeatedly brought up the $65 billion U.S. trade deficit with Germany and has accused the country of unfair automotive deals, supplier control, and using the European Union as a cover not to negotiate.
“I think that it would be useful to have candid discussions with Germany about ways that we could possibly get that deficit reduced outside the boundaries and restrictions that they claim that they are under,” Navarro told the National Association for Business Economics roughly a year ago.
Presently, the United States imposes a 2.5 percent tariff on the import of all foreign cars and a 25 percent tariff on the import of foreign trucks or vans. Meanwhile, the E.U. has a flat 10 percent tax on all vehicles imported from the U.S.
A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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Steel and aluminum tariffs will negatively impact domestic manufacturers who import said steel and aluminum to build things here, in America. It will encourage them to outsource that production to whatever nation has the cheapest steel and aluminum so that they can reduce both the material costs and the transportation costs. And any additional costs will be passed on to us, the consumer.
As others have said, tariffs on imported steel and aluminum will drive manufacturing out of the US unless comparable tariffs are charged against imported products made of steel and/or aluminum. The automotive thing between the US and Europe should be comparable. If the EU charges 10% on an imported vehicle the the US should charge 10% on an imported EU made vehicle. 10% going in one direction and 2.5% coming in the other direction is not fair or reasonable. The US and EU have similar environmental and labor regulations, so that aspect is roughly fair.