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EU Will Respond to U.S. Tariff Moves

June 25, 2018 0 Comments

The European Union will respond to any U.S. moves to raise tariffs on cars “made in the bloc,” said a senior official from the European Commission.

On Friday, U.S. President Donald Trump tweeted the following:

“If these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the U.S. Build them here!”

The tariff threat comes a month after the Trump administration launched an investigation into whether auto imports pose a threat to national security or not.

“If they decide to raise their import tariffs, we’ll have no choice, again, but to react,” said EU Commission vice president Jyrki Katainen to French newspaper Le Monde. “We don’t want to fight (over trade) in public via Twitter. We should end the escalation.”

Following Trump’s tariff threat, European Auto Stocks Index, as well as Ford and GM shares, fell.

The U.S. Commerce Department has a February 2019 deadline for the investigation into auto imports and the effect on national security. On Thursday, U.S. Commerce Secretary Wilbur Ross said the department is aiming to wrap up the probe by late July or August, and has plans to hold two days for public comments in July regarding the investigation.

Trump has repeatedly targeted German auto imports. In a meeting with automakers at the White House on May 11, the president said he was planning on impose 20 or 25 percent tariffs on some imported vehicles.. He criticized Germany’s auto trade surplus with the U.S. in particular.

Currently, the U.S. has a 2.5 percent tariff on imported cars from the EU and a 25 percent tariff on imported pickup trucks. The EU has a 10 percent tariff on imported U.S. cars.

Trump’s tariff proposal has garnered “sharp condemnation” from Republican lawmakers and business groups alike. One group, which represents several major U.S. and foreign automakers, said it was “confident that vehicle imports do not pose a national security risk.”

According to the U.S. Chamber of Commerce, U.S. auto production has doubled over the past ten years. The proposed tariffs “would deal a staggering blow to the very industry it purports to protect and would threaten to ignite a global trade war.”

German automakers Volkswagen AG, Daimler AG, and BMW AG all have automotive plants in the U.S.; BMW, for example, is one of South Carolina’s largest employers with over 9,000 workers in the state.

In 2017, the U.S. accounted for nearly 15 percent of Mercedes-Benz and BMW brand sales, and accounts for 5 percent and 12 percent or VW and Audi brand sales, respectively.

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