President Trump warned Friday that he would place a 20 percent tariff on auto imports from the European Union if Europe doesn’t lower its tariffs on U.S. goods.
“Based on the Tariffs and Trade Barriers long placed on the U.S. and it[s] 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 (percent) Tariff on all of their cars coming into the U.S. Build them here!” Trump tweeted.
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!
— Donald J. Trump (@realDonaldTrump) June 22, 2018
Trump was thought to be considering tariffs as high as 25 percent on European autos. In response, the European Commission said Wednesday it would look at imposing a 25 percent tariff on $3.2 billion worth of U.S. goods, including Harley-Davidson motorcycles. EU officials had also proposed abolishing all import tariffs on cars between the EU and U.S., hoping the carrot and stick approach might help to avoid a tariff escalation.
International automakers said the administration’s move would backfire.
“While we understand that the administration is working to achieve a level playing field, tariffs are not the right approach. Tariffs raise vehicle prices for our customers, limit consumer choice and invite retaliatory action by our trading partners. Automakers support reducing trade barriers across the board and achieving fairness through facilitating rather than inhibiting trade,” said the Alliance of Automobile Manufacturers in a statement.
U.S. and EU auto stocks took a hit following the tweet. The U.S. autos index fell 1.4 percent on the Dow, and Tesla, Harley Davidson, Ford and General Motors accounted for most of the loss. Germany’s DAX index went down 0.2 percent due to losses for Daimler, Volkswagen and BMW.
The administration has been trying to shore up the domestic auto industry in the North American Free Trade Agreement negotiations as well. The administration has pushed to change the “rules of origin” in NAFTA for when a product can be declared “made in America” in order to boost domestic auto manufacturing.
The U.S. Trade Representative’s Office declined to comment on the president’s tweet.
