Trump considering 20% tax on U.S. auto imports

Industrial Views Across The Dee Valley

The escalating economic conflict with the European Union is proving unsafe for American auto companies.

"Based on the Tariffs and Trade Barriers long placed on the U.S. and it great companies and workers by the European Union, 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!", he tweeted. The EU tariffs will target products including blue jeans, bourbon, and motorcycles, and are in a direct response to the exemptions being revoked from the USA tariffs. It's reported that Trump said the tax would be upheld until Fifth Avenue was devoid of Mercedes models.

Earlier this month, Mexico imposed a series of tariffs on $3 billion worth of USA exports of pork, apples, potatoes, bourbon as well as different types of cheese.

The president told the European carmakers to "Build them here!" - but many European carmakers build a large percentage of their vehicles in the USA already, according to the EU. German carmakers - including BMW and Daimler made some 854,000 vehicles in the U.S. in 2016. Trump had previously described China's unusually high import tariff as "stupid trade" and threatened to raise tariffs on EU-imported cars.

Leaders in China and South Korea have already said they will monitor the situation closely and react accordingly to protect the interests of brands in their countries.

Trump's trade policies have also escalated conflict with Canada and Mexico as he seeks to renegotiate the $1.1 trillion North American Free Trade Agreement on terms more favorable to Washington. A group representing major USA and foreign vehicle makers has said it was "confident that vehicle imports do not pose a national security risk". He told automakers at a White House meeting in May that he was planning tariffs on some imported vehicles.

In the US, Trump has launched an investigation into whether vehicle and automotive parts imports are hindering the sector's ability to compete globally.

Cars made in America and imported to the European Union countries are now subject to import tariffs of 10 per cent, yet goods traded from Europe to the U.S. only face a 2.5 per cent levy.

The United States in 2017 accounted for about 15 percent of worldwide Mercedes-Benz and BMW brand sales.

Felipe Munoz, global analyst at JATO Dynamics, said: "While German-made cars accounted for 4% of Q1-18 U.S. sales, American-made cars made only 1.3% of German registrations in the first quarter".

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