By on May 30, 2019

It’s been nearly a year since President Donald Trump and European Commission President Jean-Claude Juncker kissed and negotiated a temporary truce aimed at buying the United States and the EU time to renegotiate their positions without fear of new tariffs.

Unfortunately, it seems everyone had better things to do following the smooch.

At the moment, the United States is trying to establish a formal deal with the Japanese government while simultaneously trying to keep the trade war with China from escalating out of control. Meanwhile, Europe faces troubles on the home front (Brexit, rampant protests, Russia, etc.) and is reeling from recent parliamentary elections that shifted votes to both ends of the political spectrum. Neither group is in a position to make the other a top priority. Yet the EU obviously doesn’t want to wait forever, and Germany can’t afford to allow the U.S. to slap it with automotive tariffs.

The U.S. scheduled its 180-day auto deal deadline to coincide with a period in which the European Commission plans to change its leadership, meaning trade negotiations must be finalized before that point if sitting members want to have any say. According to Bloomberg, there’s also enough political heat between the U.S. and EU to make that a bigger problem than it needs to be.

European officials have repeatedly blamed the Trump administration for having an unfavorable view of the bureaucracy in Brussels. While often exaggerated, there’s still plenty of truth to it. Trump has occasionally referred to the EU as an adversary, accusing it of not effectively representing the people of Europe, specifically in regard to Brexit. He urged the EU to accept previous UK deals, to no avail. Conversely, the European Commission has been critical of the White House’s current stance on the Iran nuclear deal and its willingness to impose tariffs on anything it sees as being less than a square deal.

It’s fine for some countries to stand firm and oppose strong-arm negotiation tactics, but others don’t have that luxury.

From Bloomberg:

Germany, which exported 27.2 billion euros of cars and car parts in 2018, is more concerned about Trump’s threat of automobile tariffs than protecting European agricultural interests. The home of Mercedes-Benz, BMW and Porsche generated a surplus of 22 billion euros in automotive trade with U.S. last year.

Recent rounds of bilateral talks have yielded little progress and U.S. officials have resisted even broaching the subject of autos, according to people close to the negotiations.

“I don’t think the U.S. is ready to start on the tariff negotiations,” Cecilia Malmstrom, the EU’s trade commissioner, told reporters following a meeting with U.S. Trade Representative Robert Lighthizer earlier this month.

Despite last year’s tentative plan to eliminate auto tariffs on both sides of the Atlantic, the deal effectively fizzled out after the United States seemingly lost interest. EU officials later explained that any new automotive tariffs would be met with reciprocal actions against the United States. In January, the EU said the measures could add at least 20 billion euros ($22.3 billion) to U.S. products.

With the auto industry now in the grips of harder times, spurred by elevated development costs and a disinterested public with less cash to share, now would be an incredibly poor time for the industry to grapple with new tariffs. Yet Europe and the United States can’t ignore each other forever. Whether it’s with the sitting European Commission or not, a deal has to be made eventually — even if it involves tariffs.

[Image: The White House]

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9 Comments on “Trade War Watch: Automotive Tariffs and the European Union...”

  • avatar

    Does Trump know that BMW is the largest exporter by value of cars made in America?

  • avatar
    James Charles

    I think the EU will be hard nut to crack for Trump.

    He’s very little so far with his “Team America” approach to negotiations. The only people who support him are the under educated, who are losing jobs.

    He’s failing in China with trade.

    He left Japan with no trade deal. Trump wants US beef to have the same benefits of trade with Japan that is offered to Trans Pacific trading nations. Trump threw this trade deal out of the door. Trump must realise that “contracts” between nations exist with trade deals. Japan can’t offer the US special deals.

    The EU has already shown it was prepared to meet Trump’s removal of tariffs on US imported vehicles so long as the US removed it tariffs and technical barriers (incl the Chicken Tax). The US Big 3 lobbied against this.

    The US trade position has worsen under Trump with tariffs levied against US manufacturers to offset US aggression.

    So as Trump’s trade wars unfold it appears the US is unable to be competitive. If it was there would be no trade war.

    Trump is failing US citizens and failing the free world through poor leadership.

    • 0 avatar

      @BAFO – The US has no “technical barriers” held against imports. Go ahead and name just one.

      There’s differences in vehicle regulations it’s true, but none are for the sake of limiting or hindering imports in any way.

      US regulations and standards only exist to make autos safe and consumer protection, namely, US Lemon Laws.

      But can you name a car that was denied joining the US car market? Simply from “technical barriers”? Did I mention US Lemon Laws yet?

      Except if a Fiat 500 can adjust to the vast “differences” without killing the deal, is the issue even worth mentioning?

      As far as I can tell, the US is the only market (worth mentioning) that allows both amber or red ‘turn signals’, left or right hand drive.

      Yet EU, Japan, Korean, etc, automakers can run their global amber turn signals, but run red lenses for the US market since they’re more aesthetically pleasing to the eye.

      Again, the technical differences aren’t worth mentioning. But since you did, US mandatory safety and emissions regs came long before the EU even considered them.

      Except when the EU did design their regulations, they some how, comically, zig everywhere US regs “zag”.

      This is how the EU has done their citizens as disservice. And it’s basically criminal how they basically forced diesels on their public, mostly to spite us automakers, but created a health disaster in the process

      The EU didn’t even .require catalytic converters until 1993 models, Yikes! And they still don’t require airbags, passive restraints.

      And the insane EU automotive/trade protectionism has hurt their domestic EU automakers, when most of what they offer is diesel powered, or designed too much specifically for the EU market.
      EU consumers have been denied access to better cars too, some of which are so bad, only the EU market would buy them.

      I’m sure most EU citizens don’t even realize how badly they’ve been screwed over. Did I mention the health fallout?

      US/Canada auto unions have their own agendas, and don’t represent automakers necessarily. What the unions lobby for (or against) is specifically for their own interests (and autoworker).

      Clearly US automakers, specifically the Big 3, have absolutely nothing to gain from keeping the chicken tax alive.

      Can you name a global pickup or (work) van, not yet sold in the US, that could possibly make a dent (worth mentioning) to their sales of such?

      Actually the “Big 3” all have global vans they would love to import to the US duty-free. Obviously the Big 3 have exponentially more to lose by keeping the Chicken tax around.

      Except you somehow forgot to mention the EU has a chicken tax of their very own. But this tax is levied against trucks that really do exist.

      None of this means I’m a Trump supporter, except even with zero tariffs on either side, many other things would have to change in Europe before it would make sense to simply load US autos on a boat headed for Europe, not even most US market Toyotas, Hondas, Nissans, Hyundais, Subarus, Mazdas, etc.

      All BAFO BS aside, there’s no real reason US autos (including many by Toyota, Honda) can’t be fairly “competitive” in Europe if given a fair shake, instead of extreme EU protectionism that hurts (kills too) more Europeans that it helps.


  • avatar

    If the US built better cars, or in some cases if the US companies just built cars period instead of trucks only. Germany would not sell so many cars in the US. As the big three gradually shift to trucks only, Europe and Japan and Korea will continue to sell many cars in the US. And assuming that there is a large gas price hike in the future, which there will be at some time, cars will be wanted by the American public again. At that time Ford and GM will be screwed. If the FCA deal with Renault goes through FCA will be the only American (?) company able to sell cars to the public.

  • avatar

    Make it a level playing field: have both sides slap on a ‘token’ tariff of 5 percent on cars that enter the continent. Americans appreciate German cars for what they are. Europeans don’t appreciate American cars since they fall behind in a lot of respects: fuel economy, design, fit and finish, handling. And there’s nothing Trump cam do about this.

    • 0 avatar

      “Europeans don’t appreciate American cars since they fall behind in a lot of respects: fuel economy, design, fit and finish, handling.”

      Sure, based on exactly ZERO experience of US product for 99.9% of them!

      Somehow Europeans just “know” US cars are (were, now, since the CUV craze) not up to their imagined exalted standards by intuition alone.

      We on the other hand have been subjected to Euro crap for decades. Most exited decades ago, unwilling to adapt to the market – not like the Japanese and Koreans who persevere. Fiat biting the dust here for the second time is an example of the actual rubbish regular Europe manufacturers churn out. If we had had Citroen, Renault and Peugeot here recently, no doubt they’d have proven to be rubbish as well. It’s not as if German cars are known for redoubtable durability here either, for that matter. Or Jaguar/Land Rover which languishes at the bottom in reliability, not far behind Volvo.

      Ford and until recently GM used subsidiaries to make cars suitable for the Euro market. No domestic US cars were ever produced explicitly for export to Europe, and what was sent missed the mark almost deliberately on purpose. The exception that proves the rule is the latest Fusion/Mondeo developed in the US, and then made in Spain several years later.

      I will agree that only loons and sheltered US optimists think full-size pickups would be suitable for Europe. However, it has to be noted specifically that when US products do suit, they sell. Tesla proves that recently, poor finish or not.

  • avatar

    The European really got back at Trump by banning the Corvette and Camaro for some vague emission rules.

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