Trump greets European Union trade reprisals with threat of steep auto tariff

The EU has put tariffs on emblematic American products like jeans

The EU has put tariffs on emblematic American products like jeans

The U.S. Commerce Department is investigating whether imports of automobiles and auto parts pose a risk to national security.

The EU also stated that the rebalancing measures would be effective for as long as the USA measures are in place, in line with the WTO Safeguards Agreement and EU legislation.

FILE - U.S. Commerce Secretary Wilbur Ross testifies before a Senate Finance hearing on "Current and Proposed Tariff Actions Administered by the Department of Commerce" on Capitol Hill in Washington, June 20, 2018. "That marks a four-fold increase on the 214,000 produced in the country in 2009", the group's Association of Accredited Public Policy Advocates said on its website.

German automakers Volkswagen AG (VOWG_p.DE), Daimler AG and BMW AG build vehicles at plants in the United States.

EU Trade Commissioner Cecilia Malmstrom said this week that the 28-nation bloc was "left with no other choice" but to impose tariffs of its own after the "unilateral and unjustified decision of the U.S.".

The US now imposes a 2.5% tariff on imported passenger cars from the European Union and a 25% tariff on imported pick-up trucks. Thus, while Trump can and likely will hit Europe where it hurts, the European Union has already largely exhausted its very limited ability to retaliate against America.

Trump has launched or threatened an array of trade measures, saying he aims to create U.S.jobs and protect domestic industries. Trump called the import duty on Harleys unfair, and wanted the United States to retaliate by imposing high import duty on "thousands of motorcycles built in India and shipped for sale to the United States".

The Alliance of Automobile Manufacturers, representing major USA and European automakers, said "tariffs raise vehicle prices. limit consumer choice and invite retaliatory action by our trading partners". He argued that global oversupply of steel and aluminium, driven by China, threatened American steel and aluminium producers, vital to the US. It exported more than 70% of those cars to other countries.

The move by the European Commission is in response to the Trump administration's decision in March to introduce tariffs of 25% on steel and 10% on aluminium imported into the US.

These factors make it unlikely that either BMW or Mercedes would relocate production of their convertibles, or other low-volume niche models, from overseas to the United States.

Automotive stocks fell on the news. French leader Emmanuel Macron has accused Trump of being protectionist and isolationist, and Trump has had a chilly relationship with German Chancellor Angela Merkel.

The tariff proposal has drawn sharp condemnation from Republican lawmakers and business groups. He also hit China with tariffs on $200 billion worth of goods on Tuesday, igniting fears of a trade war with the economic powerhouse. If this investigation finds that the "national security" of the United States is compromised by a reliance on imports, than tariffs can be imposed.

Mercedes is expected to sell about 20,000 convertibles this year in the United States and BMW fewer than 16,000, LMC projected. Europe, the Middle East and Africa accounted for little over 21 percent of its global retail sales in the last quarter.

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