Trade War Watch: Trump's Not Letting Up on Europe's 10 Percent Solution
The past week has seen a flurry of trade trade announcements — none of them particularly promising for the United States. After a brief moment where President Donald Trump’s tariff threats seemed to have a positive impact on the European Union, Germany threw new support behind China as the People’s Republic issued a stunningly large 40-percent retaliatory tax on vehicles imported from America.
While Europe and the U.S. still might work out a zero tariff deal on automobiles, the recent activity has led Trump to respond with another warning. He now claims if the region cannot engage in fair trading practices with the United States, he’ll further restrict imported cars.
The president is scheduled to discuss trade with European Commission President Jean-Claude Juncker in Washington later this month, and the matter will assuredly be a central topic.
“That’ll change also and I think we’ll see that because on the 25th of July they’re coming in to start negotiations with me. We’ll see,” he said after a meeting with NATO leaders. “And if they don’t negotiate in good faith we’ll do something having to do with all the millions of cars that are coming into our country and being taxed at a virtually zero level, at a very low level … I think it’s been a very effective way of negotiating, but I’m not negotiating, I just want fairness for the United States.”
Currently, United States taxes imported vehicles at 2.5 percent and light trucks at a less-fair-sounding 25 percent. Europe has its vehicle import tariffs set at a relatively flat 10 percent.
The U.S. Senate opposes the president’s proposals to raise car tariffs on the grounds of protecting “national security.” In a 88-11 vote Wednesday, it approved a symbolic motion backing a role from Congress in ratifying the imposition of such tariffs. But the key words there are symbolic and motion; there’s no authority behind it.
Trump’s recent gripes seemed to be in response to his assumption that U.S. farmers are losing ground in terms of exports, though he also cited Germany’s energy deal with Russia and the increasingly large influence China has in the region. The NATO trip also saw him telling allies they need spend more on their own defense if they’re not interested in working together on matters of trade. His big play for now, however, remains automotive in nature. If Europe can’t play on terms he finds favorable, he’ll strike out at its most profitable industry.
[Source: Reuters]
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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@ Big Al At the risk of sounding obnoxious, consider a few points. 1. We really don't care what the EU thinks- in particular, Britain and Germany. Odd as this may sound, I think there's excellent odds Trump will be working with new PM's from both countries before it goes the other way around. 2. While Trump struggles with diplomacy, he has tapped into some deep feelings inside of his own borders. That's going to make some of these decisions harder to unwind over time (without judgement of their merits).
@ Big Al: "The US is now the smallest market as everyone else is more advanced at integration across the who spectrum of business, economics, science, etc." I'm not sure what metric you're using there, but it doesn't exist on this planet. I don't want to sound pro-Trump (or anyone else). I'm a pragmatist when it comes to my worldview. When the asteroid hits tomorrow, what other land mass would be better equipped to survive the aftermath than the US? @ Arthur Dailey: that's the point I was making. Good, bad, or otherwise, we're witnessing a powerful pushback to 8 yrs of Progressivism. As it's playing out, the pushback is quite a bit stronger than anyone anticipated. Trump never should have won, he should have been impeached, policies stopped... and so on. Hasn't happened- just the opposite actually. Never Trump Republicans are out looking for a party to hand their hat on, and Democrats are running in circles trying to find a strategy that works. Newsflash- they haven't found one yet. We live in interesting times.