By on February 19, 2019

The showdown between the European Union and United States over auto tariffs reminds this viewer of Charles Bronson and Henry Fonda in Once Upon a Time in the West, and with good reason. Both players appear ready to reach for their Colt Single Action Army in a bid to do maximum damage to the other.

After the U.S. Commerce Department delivered a confidential report to the White House on Sunday, the EU is warning its trading partner that any tariffs imposed on European-built vehicles will be met with similar levies on American goods.

The Commerce Department is tasked with advising President Donald Trump on how to proceed on the issue of new auto tariffs. Repeatedly, Trump has floated the idea of steep tariffs on Euro vehicle imports as a way of bolstering U.S. manufacturing, jobs, and foreign investment.

In this scenario, the president would use Section 232 of the Trade Expansion Act of 1962 to levy the tariffs. Section 232 gives a leader the ability to impose import duties on certain products and commodities to protect the nation’s national security. The Commerce Department report, which Trump will have 90 days to review, either provides the go-ahead, or tells the president to pull a U-turn on tariffs.

European automakers fear the report contains recommendations for tariffs of 20 to 25 percent on their region’s vehicles. For its part, the domestic industry doesn’t like sitting on pins and needles.

In a statement reported by Reuters, the Motor and Equipment Manufacturers Association said, “Secrecy around the report only increases the uncertainty and concern across the industry created by the threat of tariffs.”

“It is critical that our industry have the opportunity to review the recommendations and advise the White House on how proposed tariffs, if they are recommended, will put jobs at risk, impact consumers, and trigger a reduction in U.S. investments that could set us back decades,” the association continued.

Several foreign automakers bashed the proposal last year, claiming that such a move would add significantly to vehicle prices, even on those built in the United States.

Should the U.S. levy tariffs on imported European-built vehicles and auto parts, the EU will “react in a swift and adequate manner,” said Margaritis Schinas, a spokesman for the European Commission, on Monday. Germany stands to be hit the hardest if this comes to pass. In preparation for a U.S. tariff, the EU has ammo in its chamber: $23 billion in U.S. goods earmarked for EU-imposed tariffs.

While Trump shelved his tariff talk last year as the U.S. and EU proceeded with trade negotiations, the Commerce Department report has brought old fears to the forefront. Speaking to the terms of the earlier ceasefire, the EU claimed Monday it would “stick to its word as long as the U.S. does the same,” Bloomberg reports.

[Source: Bloomberg] [Image: Daimler AG]

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39 Comments on “Don’t Think We Won’t Fire Back, EU Warns U.S. After White House Receives Key Auto Import Report...”


  • avatar

    The basic problem today (and for decades past) is that the EU brands make a LOT of vehicles – both fully imported & those assembled here with many imported components – that Americans want to buy. American brands make many fewer vehicles that EU residents want to buy.

    Similar issues apply for Asian brands versus domestic brands.

    • 0 avatar
      DenverMike

      Tariffs are far from equal and that’s what this saga is all about. Real shocking the EU doesn’t want to change that. But it goes way beyond silly little tariffs. For those you just cut a check, add it to the price, whatever.

      No it’s all the underhanded EU non-tariff and technical barriers that kill the most.

      • 0 avatar
        Matt51

        Originally Trump proposed zero tariffs on cars sold between the US and Europe. Europe said ok, then Trump (maybe Mnuchin) decided that wasn’t good enough. Europe agreed to eliminate all tariffs on cars, so what is Trump really aiming for?

        • 0 avatar
          James Charles

          Matt51,
          I believe you are correct. The EU was prepared to meet Trump’s zero on ALL vehicles.

          That was shut down rather quickly by the US manufacturers. It had something to do with the 25% tax the US levies in pickups, vans and heavy trucks.

          This shows the US as an uncompetitive vehicle manufacturer.

          • 0 avatar
            DenverMike

            US OEMs have more to gain by killing the Chicken tax. I’m guessing they’d rather not pay it (Ford’s imported Transit Connect), or have to dodge it with partial or complete US builds of global vans.

            Yet US OEMs have extremely weak offerings in the form of pickups from around the world that can truly compete, midsize to F-450 pickups. Even the ones already for sale in the US can hardly make a dent, so what could?

        • 0 avatar
          James Charles

          Matt51,
          I believe you are correct. The EU was prepared to meet Trump’s zero on ALL vehicles.

          That was shut down rather quickly by the US manufacturers. It had something to do with the 25% tax the US levies in pickups, vans and heavy trucks.

          This shows the US as an uncompetitive vehicle manufacturer.

        • 0 avatar
          DenverMike

          EU autos that thrive are very EU specific, closely following harsh EU regulations. Tiny cars, tiny engines, diesels, etc, but also well protected by tariffs.

          Even with zero tariffs, do you really think US autos, including most (and most profitable) by Toyota, Nissan, Honda, Hyundai, etc, can be simply loaded on a boat headed for Europe and all’s good?

          Yet the US market/buyers will accept any autos from anywhere.

          • 0 avatar
            Ce he sin

            I’m always fascinated to read about these “EU specific” or “Europe specific” cars that seemingly can’t be sold anywhere else.
            Let’s consider one, the Peugeot 208. You’ve probably never heard of it. You’d hate it. Made in France, so it’ll fall apart, and has “tiny” engines (horrors, there’s even a triple!) so it’ll explode if you go more than about 50 mph.So, let’s see where it’s sold. Anywhere outside Europe? Yes, actually. Is it sold in the continent of America? Sure is. Argentina and Chile, I haven’t checked others. Africa? Sold in Kenya, others not checked. Australia? Yup. Asia? Sold in Malaysia, others not checked. So there we have it. An unknown, unexportable, EU specific car has a rather bigger global footprint than that American icon, the Ford F150. Who’d have thought?

          • 0 avatar
            jatz

            “has a rather bigger global footprint than that American icon, the Ford F150”

            Yeah, well, we still have a highway system in the US.

          • 0 avatar
            DenverMike

            The point is any subcompact (or any car) that sells good in North America would have be redesigned specifically for Europe to sell good there, or have two similar (concurrent) subcompacts for the two markets.

            Yes hardly worth the trouble, which is exactly what EU protectionism intends.

            But why wouldn’t a subcompact, French or otherwise, EU specific or not, thrive all around the world, especially in poorer countries, 3rd world, etc?

            F-150 examples are found in every corner of the world , where allowable, except imported under “grey market” rules, red tape and or other large penalties, including RHD conversion.

    • 0 avatar
      James Charles

      JCW,
      That is one issue that hampered the US manufacturers.

      The other issue is how Detroit (GM & Ford) controlled their global operations. When the Oil Crisis occurred the US manufacturers were unable to alter their business model to meet the challenges of the changes in global trade at the time.

      Detroit was structured to suit how US manufacturers dominated global trade. Now we can see the legacy of the inability of the US to change, Ford and GM are becoming more North American centric where protection is offered to the vehicles not suited for global consumption, hence a reduced proportion of global market is captured by the US manufacturers.

      ….. then add the UU’es refusal to adopt global design regulation further limits US vehicle exports.

      The world other than the US is 85% of the vehicle market.

  • avatar
    PrincipalDan

    What’s the over/under on a bunch of vehicles assembled in the USA but wearing “European” badges getting slapped with tariffs?

    Just commenting on the general incompetence of the bureaucracy.

  • avatar
    Matt51

    Our primary trade deficit problem is with China. It is stupid to start a trade war with Europe. Much pain, little gain.

  • avatar
    gasser

    Double whammy for BMW and Mercedes, as any models they build in the U.S. and ship to Europe will also be taxed at their punitive rate. Europe needs to accept trade EQUALITY. They can’t be charging 10% on our vehicles while we charge them 2.5%. No matter what the tarrif, we will sell hardly any U.S. built cars in Europe. This means they will slap the big tariffs on a different item and it will be off to the races in a Trade War.

    • 0 avatar
      mcs

      ” we will sell hardly any U.S. built cars in Europe.”

      Center for Automotive Research projects 100,000 US made cars going to Europe in 2019. I’d guess half that, but even then, that’s a decent number.

    • 0 avatar
      Lockstops

      European countries also have to stop taxing US cars with big engines (with real-world emissions equal to cars with small turbo engines) 10.000€ to easily 20.000€ per car. That’s actually happening in some countries. In many more they tax company cars (the majority of new car sales in many EU countries) per month or per year in massive amounts due to exactly those features that U.S. cars are at a disadvantage in…on paper but not necessarily in real life.

      People writing that EU treats U.S. products unfairly in many more ways than just import tariffs are 100% correct. They have massive armies of bureaucrats who hate America, hate big-engine’d ‘real’ cars, hate their own citizens and don’t want them to have fun, and also who are on the EU manufacturers’ payroll. You can bet your a** that they can come up with so many ways to punish and disadvantage U.S. car manufacturers.

      Add to the extra cost and taxes that the EU consumers have a lot less disposable income and are far more price-sensitive than U.S. consumers, because basically they’re taxed into almost poverty so they can’t splurge extra on taxes for a ‘real’ or ‘fun’ car but instead are forced to buy a 1.4 litre Skoda, and you can see why they won’t buy American pickup trucks, Hellcats and Camaros, especially not large gasoline V8 SUVs.

      • 0 avatar
        Hummer

        This. Even with equal tariffs America doesn’t slap Euro automakers with draconian displacement or carbon taxes. If we’re going to talk about free trade then let’s have actual free trade. Europeans are much more protectionist than America.

        I’ll believe that’s Europe is playing fair when (if current currency rate is correct) a $36,000 V8 Mustang sells for an equal €32,187 Euro not including destination costs.

        • 0 avatar
          highdesertcat

          Hell, I just hope that President Trump levies a tariff on European-made and Chinese-made cars at the same rate as Europe and China place on American-made cars.

          Now, China and the EU are, of course, playing for time, hoping that Trump will be ousted in 2020.

          Whether he leaves office in 2021 or 2025 remains to be seen but acting on the tariffs he promised on foreign-made goods has got to be a good thing for America. There’s the cccccaching factor for the Treasury and maybe more Americans will buy vehicles actually Made in America, even if they are foreign brands.

          At least the tariffs will keep China and the EU focused on the trade imbalance and inequities that exist now and have existed for decades since the end of WWII.

        • 0 avatar
          mtunofun1

          That free healthcare has got to come from somewhere.

          • 0 avatar
            Lockstops

            You mean ‘free healthcare*’.

            There is actually no law in any country that the public sector or government must provide healthcare to citizens. It’s a web of legislature that provides _some_ healthcare in _some_ way in a way that the government decides, and there’s very little any citizen can do if they aren’t provided with proper healthcare for their needs or are the victim of malpractice. If there is a complaint or lawsuit against the public sector healthcare provider, about 99% are won by the public sector, and even if they lose the consequences are maybe a warning and a minimum fine (which goes to the state, not the victim), hardly ever any real compensation to the victim/’customer’. Never any punitive damages.

            It is 100% fact that at least in some ‘free healthcare’ countries that advertise themselves as wealthy beacons to be used as an example, in reality they have elderly die of starvation and other mistreatment at care homes. People are denied many forms of healthcare (lots of treatments, medicines, procedures are either denied or patients aren’t even told that in other countries or in the private sector there would be those options). In many cases the methods used are antiquated. Waiting lists are incredibly long. Diagnoses are purposefully made incorrectly as per policy so that the public sector would either save money or make things easier for themselves.

            Basically ‘free healthcare’ provided by the state does not work, even with massive taxation, so they cheat by not providing proper healthcare. And even then they can’t get the massive taxes to cover the costs. Much of it has to do with the administrators giving themselves such good salaries and them safeguarding their positions and buying friends and allies by creating new high-paying positions to give to those people they want to be loyal/helpful to them. Basic socialism.

          • 0 avatar
            Vulpine

            @Lockstops: Do you have documented proof of this? I’m sure a lot of people currently promoting government-controlled healthcare here would love to have evidence to take to their politicians.

          • 0 avatar
            Lockstops

            Vulpine: I myself currently live in a ‘free healthcare*’ country. But I’d rather not share my own personal medical experiences.

            My grandmother was constantly complained about at her care home, they said she was “a difficult patient” (Alzheimer’s). Surprise surprise it didn’t take long until “she fell” and hit her head (while being handled by a nurse), they didn’t bother treating her at all and she died from that a few days later. I’m sure they were really happy to get a “more easy to deal with” patient to replace her. No-one even thought to complain, it wouldn’t have achieved anything since that’s ‘normal’.

            It is a fact that in many facilities the elderly are literally dying of starvation, have to sit in their waste all day, are force-fed medication to ‘calm them down and make them less needy’. And that’s just one small part of it. The last scandal broke out just a few weeks ago. And having a scandal break in a society where no-one dares to criticise the system means that for sure there have previously been countless scandals that simply weren’t reported on.

            Actually it’s certain that the scandal broke because there is currently a power struggle within the politicians/public sector since they are doing a major overhaul to the health care system (which means opportunities for power and money), and likely one camp wanted to smear the other camp with that scandal. Why are they overhauling the ‘free healthcare system’? Because everyone knows that it isn’t working, it has crumbled to a point that they have to at least appear to be doing a fundamental overhaul.

            Procedures that in other countries or if you pay for private sector healthcare you get done immediately and without question are not done in the ‘free healthcare*’ country at all. Or if you spend months or years fighting to get some treatment in order to be able to do simple physical activities (getting to ‘normal health’) then you get a horrible experience, very often with antiquated methods and treatments used. Very limited pain medication etc.

            Some treatments in the nowadays mostly woman run bureaucracies are only done to/for women. Many screenings and treatments are limited to women only, even thought there is no medical reason for leaving men out. The only reasoning is that “it’s just been done this way until now, and we are currently reviewing our guidelines to see if we should include everyone”.

            And kids, who can’t fend for themselves? Especially teenagers are not in a good position since they usually don’t have their parents along for appointments. For younger kids and babies: I don’t know a single family who hasn’t bought private sector care for their babies through additional insurance policies a long time before they’re born.

            Even wealthy people are transported far away to a second ‘concentration hospital’ (specialised in certain types of operations like a factory) and have to wait 3 days with a broken hip in shared hospital rooms, unable to sleep and told every day to not eat in preparation for a possible major operation! This is not hyperbole or fake, that is factually what happens.

            Then there’s the situation for the less fortunate people who live in rural areas and not the major cities…

          • 0 avatar
            Vulpine

            @Lockstops: “It is a fact that in many facilities the elderly are literally dying of starvation, have to sit in their waste all day, are force-fed medication to ‘calm them down and make them less needy’.”

            — I hate to tell you this but it happens here, too, often in high-priced care centers. That is the fault of the administrators far more than of the governments (or whomever) owning and supposedly operating them. We may have the advantage of slightly-improved legal recourse here but it’s still a matter of proving the issues after the fact and that’s hardly any easier here than it is there, I’m sure.

  • avatar
    jatz

    Ooh… they shall taunt us a second time-a.

  • avatar
    Carrera

    Wow…Harley Davidson and Jack Daniels are in real trouble now…hahaha

  • avatar

    Besides VW what Euro brands have US competition? Lincoln and Caddy just aren’t luxury, they’re cheaper premium brands. VW really isn’t a main contender against the big three. BMW, Benz, and Volvo all have US plants now. When I sold Fords our biggest competitors were the Japanese crossovers and sedans. I sell Volvos now, and only folks that I talk to that consider the domestics are either looking for a bargain or need a full size truck based SUV which none of the Euro brands offer anyhow.

  • avatar
    stingray65

    The problem for the US are the high taxes required to support the EU Welfare state. The 10% EU car import tariff is just the beginning, then add value added tax on top (up to 25%), which is calculated on the value of the car + the 10% tariff + plus the shipping cost. Throw in various emission related fees that favor tiny gasoline engines and hybrids, and fuel taxes that double or triple US prices, and larger sized, larger engined US cars face an almost impossible price and operating cost disadvantage that will keep them as niche players. And of course the EU welfare state also means they don’t have money to pay for their own defense, and won’t pay retail on US drugs, so the US taxpayer also subsidizes EU defense and nationalized healthcare systems.

    • 0 avatar
      Lockstops

      Correctamundo.

      I’d put even more emphasis on taxes, like on the company car taxation which forces basically the majority of the EU new car buyers to buy very certain base-model-engine (=low CO2 on paper) cars and really have no other choice.

    • 0 avatar
      HotPotato

      Horsefeathers. The Europeans already agreed in principle to go to ZERO tariffs on both sides. Any local taxes apply equally to their domestically produced cars as to imports. Americans make plenty of small efficient engines now: GM has an excellent 1.4T and a strong 2.0T, for example. The Euros have been quite willing to work on harmonizing standards with us too, potentially further reducing barriers to entry. So what in the world is there to have a trade war over? Nothing. Literally, absolutely nothing.

      The only thing you’re left with is that we don’t build small cars—well, that’s our myopia, not Europe’s problem. Know how the Japanese got huge in the American market? They stopped shoveling whatever they had on hand at us and started building what we want to buy. The problem isn’t your bizarre cartoon of European socialism, it’s capitalism: we don’t build a competitive product that meets their buyer’s demands.

      • 0 avatar
        Lockstops

        It is a fact that U.S. manufacturers can enter the EU market only by spending massive amounts of money on new car models made for that market. So how is that ‘fair competition’ if you force your competitor to develop completely new model lineups to match yours?

        And even then companies like VW will have new schemes in development all the time. If the U.S. manufacturers spend the billions of $$ and years of development time to come up with products that are tactically fitting for the EU taxation models then the EU competitors will have intelligence of what the U.S. manufacturers are up to years before the models are ready for showrooms (that’s the way it is with all of the auto industry, they all know approx. what’s going on and know of major developments before they’re released to the public). The EU manufacturers like VW will have already prepared _new_ taxation together with the legislators and will have developed their next generation model lineup to fit that perfectly. So when U.S. new ‘EU-tailored models’ come to market there will already be new tax laws either in place or on the way, and their cars will again be at a disadvantage even though they have just gone through the massive effort and cost to fit in with the previous legislation.

        My question is why shouldn’t U.S. models be competitive with EU cars already now? Just because they’re somewhat different shouldn’t mean that they are completely unsellable to the EU market! Fact is that EU laws and taxation have purposefully been schemed up to close out U.S. and Japanese naturally aspirated and larger cars. Even now on paper the U.S. models are massive polluters etc. but in reality they are very equal to European small turbo engines, certainly not as horrible as the CO2-taxation based on the rigged measurement cycles.

  • avatar
    Vulpine

    Annnnnnnd….. The Chicken Tax grows by another hefty percentage chunk.

  • avatar
    CanadaCraig

    If ALL trade between the US and the EU stopped – what would happen?

    • 0 avatar
      Hummer

      What does Europe make any more? pens, shoddy IKEA furniture, and a few less than reliable cars?

      I remember my Grandfather having a large wooden record player that was made in UK, very nice piece. I like good quality pieces but I mean seriously what is Europe sending us today that can’t be bought elsewhere? I don’t think Europe has many (any?) cards to play.

    • 0 avatar
      el scotto

      Less vehicles, vehicle parts, Airbuses, pharmaceuticals,and booze. A decent read: https://ec.europa.eu/eurostat/statistics-explained/index.php/USA-EU_-_international_trade_in_goods_statistics#Most_traded_goods:_motor_cars_and_vehicles


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