Trade War: Europe Readying Retaliatory Duties for Prospective Auto Tariffs
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]
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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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.
Wow, who saw this coming? /s Oh, right, everyone who ever took a macroeconomics course.