Trump threatens 20pc tariff on all imported European Union cars

US President Donald Trump

US President Donald Trump

The tweet came as Europe imposed tariffs on goods worth 2.8 billion euros ($3.2 billion) - including Harley Davidson motorcycles and Levi's jeans - which are themselves a targeted response to Trump's earlier decision to impose steel and aluminum tariffs on European exports to the United States. Germany is the largest European manufacturer of automobiles, though Germany companies have a huge presence in the United States, with large factories in SC and Tennessee.

President Donald Trump on Friday threatened to escalate a trade war with Europe by imposing a 20% tariff on all USA imports of European Union-assembled cars.

"You look at the European Union - they put up barriers so that we can't sell our Ford products in, and yet they sell Mercedes and BMW, and the cars come in by the millions, and we hardly tax them at all. Build them here!" Trump tweeted. Trump is threatening to impose a tariff double that size if the European Union doesn't remove its barriers.

The goods targeted include typical American products such as bourbon, peanut butter and orange juice, in a way that seems designed to create political pressure on President Donald Trump and senior USA politicians.

Trump imposed tariffs of 25 per cent on European Union steel and 10 per cent on aluminum on June 1.

The EU, Canada, Mexico and other countries have announced retaliatory measures against USA steel and aluminum tariffs, as the US move may violate the rules of the World Trade Organization (WTO).

German-built vehicles exported to the USA fell 10% to 4,94,000 vehicles, while German automakers produced 8,04,000 vehicles in the US a year ago.

The President's tweet caused a tectonic shift, cratering the European Auto Stocks Index, and causing shares of USA automakers Ford Motor Co and General Motors Co to rapidly fall, and then rebound, Reuters noted. Beijing has vowed to immediately retaliate with its own tariffs on USA soybeans and other farm products in a direct shot at Mr. Trump's supporters in America's heartland.

In May, the Trump administration also said that it would begin investigating whether the import of auto parts into the US constitutes a national security threat.

Wilbur Ross, U.S. Commerce Secretary on Thursday said that the Commerce Department plans to wrap up its investigation into automotive imports by late July or August.

TRT World's Sarah Morice has more.

In May, the Trump administration floated a 25 percent tariff on vehicle imports, framing them as a means to ensure the vitality of key US industries. Ross during a Senate hearing on Wednesday faced heated questions from Republican Senators who argued there was no merit to claiming auto imports threaten the country's defense capabilities.

"No, because the United States is both an important export market and a strong production base for us", Mattes said. This policy aims at making China into the global leader in high technology industries and keeping foreign business groups out of these economic fields. "Germans are the world's leaders in the premium market as they hit before American and Japanese cars, and have been evolving fast, with large ranges of products".

"We've never seen anything like this", said Mary Lovely, a Syracuse University economist who studies worldwide trade - at least not since countries tried to wall themselves off from foreign competition during the Great Depression. Nevertheless, the Tweet spooked European automakers, particularly those in Germany.

Beijing has vowed to immediately retaliate with its own tariffs on U.S. soybeans and other farm products, in a direct shot at Mr Trump's supporters in America's heartland. "Automakers support reducing trade barriers across the board and achieving fairness through facilitating rather than inhibiting trade".

When he announced the investigation back in May, Ross placed heavy emphasis on national security, saying that for "decades" there was "evidence suggesting that imports from overseas have eroded our domestic auto industry". Automotive News data shows about 7.2% of vehicles sold in the US through May were assembled in Europe.

Autos stocks fell on the news.

It is hard for the White House to unilaterally impose tariffs without input from Congress, but Trump has found several ways to do it this year.

A group representing major U.S. and foreign automakers has said it was "confident that vehicle imports do not pose a national security risk". "But we expect more requests by end-users in the United States, for products imported from Japan, will be accepted", a Tokyo-based steel trader said Thursday. Prior to the meeting, Trump reportedly told French President Emmanuel Macron during a recent state visit that he wants to get to the point where there will be no Mercedes-Benz models driving down New York's upscale Fifth Avenue. It accounts for 5 percent of VW brand sales and 12 percent of Audi sales.

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