Trump threatens EU auto industry over bloc’s trade war retaliation

Traders work on the floor of the New York Stock Exchange (NYSE) at the Opening Bell in New York, New York, USA, 2 March 2018. [EPA-EFE/JUSTIN LANE]

US President Donald Trump on Saturday (3 March) threatened a tax on cars from the European Union if it enacts retaliatory measures in response to his announced plans for tariffs on imported steel and aluminum.

“If the E.U. wants to further increase their already massive tariffs and barriers on U.S. companies doing business there, we will simply apply a Tax on their Cars which freely pour into the U.S.”, Trump tweeted.

“They make it impossible for our cars (and more) to sell there,” he added, slamming what he called a “big trade imbalance.”

Trump said on Thursday that a plan for tariffs of 25% on steel imports and 10% on aluminum products would be formally announced this week. He blamed the US’s “very stupid” trade deals for, according to him, an $800 billion annual trade deficit.

“When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win,” Trump said on Twitter on Friday.

The European Union raised the possibility of taking countermeasures. France said the duties would be unacceptable, and China urged Trump to show restraint. Canada, the biggest supplier of steel and aluminum to the United States, said it would retaliate if hit by US tariffs.

The International Monetary Fund also expressed concern, saying the proposed tariffs would likely damage the US economy and those of other nations.

EU 'will react firmly' to US steel, aluminium tariffs

The EU “will react firmly” to defend its interests against steep US trade tariffs on steel and aluminium, the European Commission chief Jean-Claude Juncker said yesterday (1 March).

EU drawing up measures

On Friday, European Commission chief Jean-Claude Juncker said the EU was drawing up measures against leading US brands such as Levi’s and Harley-Davidson, after Trump sparked global uproar by announcing plans for tariffs on steel and aluminum, then describing trade wars as “good, and easy to win.”

“We will not sit idly when European industry and jobs are threatened,” Juncker said on the sidelines of a conference in Hamburg, Germany.

The EU’s response matches similar moves during a 2003 “steel war” unleashed by George W. Bush’s administration – which prompted he US to back down before the EU carried out its threat.

US protectionism is bad for everyone, especially for America itself

Since the election of Donald Trump, US trade policy is threatening to become more and more protectionist and this could be a wake-up call for Europe to strengthen its single market and stabilise the European Union,  writes Thieß Petersen.

An advocate of “Made in America,” Trump has been a harsh critic of his predecessors’ trade agreements, which he says have taken millions of jobs away from the US.

He has been particularly vocal in criticising the North American Free Trade Agreement (NAFTA), which the US, Canada and Mexico are currently renegotiating. One aspect of the pact is that any vehicle at least 65% assembled in one of the three countries can be sold without import tax.

Trump has already repeatedly accused the EU of impeding US imports and threatened customs taxes on European manufacturers, particularly Germany and its high-end brands.

But German vehicles represent only a small part – 7.9% – of the US automobile market, according to the German auto industry association (VDA), with German manufacturers producing 803,000 vehicles in the US itself in 2017.

Most foreign auto manufacturers selling vehicles in America have some form of production operations in the US.

Is a trade war between the US and the EU on the horizon?

Donald Trump’s Republicans are preparing reforms that would significantly affect the rules of trade throughout the world. EURACTIV Czech Republic partner Aktuálně.cz reports.