By on September 20, 2019

The European Union is keeping the possibility of retaliatory tariffs against the U.S. on the table should President Donald Trump follow through on threats to impose new duties on automotive goods.

European Trade Commissioner Cecilia Malmstrom criticized Trump’s suggestion from May that EU cars and auto parts shipped into the American market posed a national security risk. The administration has issued a mid-November deadline to decide whether to not it’s worth trying to mitigate vehicle-related imports.

Why is this coming back up? November is fast approaching and, with the U.S. winning right to slap the EU with billions of euros in punitive fees thanks to the Airbus dispute, Europe is getting worried it’s heading for tariff town. Washington has already strongly hinted that it would follow through with tariffs if it won its case with the World Trade Organization and has prepared a broad list of EU products, including those stemming form the automotive industry. 

“We firmly reject that we are a security threat,” Malmstrom said on Friday. “That is absurd. If there will be tariffs there, we would take countermeasures.”

Her five-year term as EU trade commissioner ends on October 31st. According to Automotive News, she is slated to be replaced by current European agriculture chief Phil Hogan — the outlet added that he had previously referred to President Trump as “reckless.”

From Automotive News:

Last year, Trump infuriated Europe by declaring American imports of steel and aluminum a security threat and imposing levies of 25 percent and 10 percent, respectively, on shipments from around the world including the EU. That prompted the bloc to retaliate with a 25 percent tariff on 2.8 billion euros ($3.1 billion) of American goods such as Harley-Davidson Inc. motorcycles, Levi Strauss & Co. jeans and bourbon whiskey.

A 25 percent U.S. levy on foreign cars would add 10,000 euros ($11,000) to the sticker price of EU vehicles imported into the country, according to the Brussels-based European Commission, the bloc’s executive arm.

The value of EU automotive exports to the American market is about 10 times greater than that of the bloc’s steel and aluminum exports combined. As a result, European retaliatory duties would target a bigger amount of U.S. exports to Europe.

Washington has estimated the amount of damages resulting from EU subsidies that are still in place at roughly $11 billion. A parallel complaint filed into the WTO by the Europe has alleged illegal U.S. subsidies for Boeing. The EU expects the outcome of that case to give region to retaliate with its own tariffs sometime next year. Ideally, it’s hoping to avoid new tariffs altogether and reach an agreement with Washington.

 

[Image: servickuz/Shutterstock]

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18 Comments on “Trade War: Europe Readying Retaliatory Duties for Prospective Auto Tariffs...”


  • avatar
    schmitt trigger

    Opening a war on multiple fronts is a sure recipe for disaster.

    President Trump should focus on the trade war with China, which is far from being resolved.

    • 0 avatar
      Lorenzo

      It’s not a “war”, it’s trade negotiation. Over the long haul the EU is like the rest of the world: it can’t survive being excluded from the American economy.

      China hoped to insulate itself by embedding itself in the global supply chain, but Trump’s tariffs are causing world trade to relocate its supply chain outside of China, where it can’t be held hostage.

      That’s the real purpose of the tariffs imposed on China, not a balance of trade, and the EU tariffs are intended to achieve the same result, not more equitable trade balances, or reducing EU subsidies to Airbus.

      Trump is choosing European cars and auto parts because that’s what will hurt the EU the most. Harley Davidson might be hurt, but Levi’s and American bourbon will find its way into EU by a more circuitous route, and at higher expense for EU customers.

      Globalists won’t like it but they may evenually realize Trump is conducting what was once called realpolitik. He’s just using trade negotiations and tariffs instead of alliances and armies.

  • avatar
    Hummer

    I think some people overestimate the power of the WTO over a sovereign independent country. What they rule has no affect on any country looking out for its own people. All of these world organizations are useless as they sound.

    • 0 avatar
      Lorenzo

      You must have noticed that China has routinely ignored WTO rulings, as well as World Court rulings, and even internal dispute resolution rulings based on treaties that China has signed and agreed to abide by. It’s true, there’s no enforcement mechanism, so victories are of the moral variety. It’s still all about power.

  • avatar
    FreedMike

    Good news: I can save myself a ton of time I’ll never get back and skip this thread…

  • avatar
    Lokki

    3 Sept 2019

    WASHINGTON (Reuters) – The United States hopes to see a decision from the WTO in the next week or two about the level of tariffs Washington may impose after winning a case about European subsidies to Airbus, the U.S. ambassador to Brussels said Wednesday.”

    The U.S. won at case at the WTO regarding Airbus subsidies. The level of tariffs will be decided by the WTO.

    So… Trump didn’t just pull this out of thin air.

    • 0 avatar
      Manic

      ‘May impose’ i.e. there’s decision to be made and one possibility is not to impose anything. WTO will just rule on this case how big a subsidy Airbus received from EU, does not mean trump has to collect exact same amount via tariffs.

  • avatar
    redapple

    Rail car Auto carriers are wide open in Europe.
    Saw this in Italy.

    In USA. Armored up like war is coming.

    Our ghettos are worse than theirs.

    • 0 avatar
      rpol35

      Our U.S. auto racks used to be open, about as recently as the early to mid ’90’s, but we encountered so much vandalism we had to go to completely enclosed racks.

      I used to work for an American Class 1 railroad and I was in the automotive business unit – the manufacturers pushed for enclosed racks due to the constant claims being placed for vandalism and theft (radios when you could still steal a car radio and resell it). It’s unfortunate but that’s the way it now is.

  • avatar
    Jeff S

    We need to be on good terms with our allies if we want to negotiate on trade with China. Going it alone is not the answer. There is more power in having our allies with us when negotiating with China.

  • avatar
    Luke42

    Wow, who saw this coming? /s

    Oh, right, everyone who ever took a macroeconomics course.


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