European Union to respond to any United States auto tariff move

Ivan Schwartz
June 24, 2018

The EU measures cover a total of around 200 categories, also including various types of corn, rice, orange juice, cigarettes, cigars, t-shirts, cosmetics, boats and steel.

Automakers' stocks took a hit following Friday's news, with Ford and General Motors selling off sharply.

Trump had directed the Commerce Deparment to launch an investigation into imported autos in May, similar to the procedure that led to the steel and aluminum tariffs. Europeans claim that breaks global trade rules.

President Donald Trump on Friday renewed his threat to slap steep tariffs on imports of European-built cars such as BMWs, Mercedes-Benzes and Audis, another warning sign of a brewing worldwide trade war.

And then there's the question about whether meaningful tariffs will even be imposed in the first place; after all, the author of "The Art of the Deal" is infamous for staking out an aggressive stance and then eventually coming back toward his negotiating "adversaries", a strategy we've seen play out numerous times through the first 17 months of the Trump presidency.

In Tokyo, Chief Cabinet Secretary Yoshihide Suga told a press conference the Japanese government "will tenaciously continue to urge (more) exemptions from additional tariffs". There's support in the administration and from German carmakers for such an idea, but no agreement has been reached yet.

A former White House trade adviser says Trump "has been so belligerent that it becomes nearly impossible for democratically elected leaders - or even a non-democratic leader like [Chinese President] Xi Jinping - to appear to kowtow and give in".

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"Exclusions generally are granted if there is no domestic availability and there are no overriding national security concerns", the department said in a statement. "It's a classic case of 'ready, fire, aim, ' and it will only lead to litigation in the USA and a loss at the WTO when we are inevitably taken there".

It's a classic case of 'ready, fire, aim, ' and will only lead to litigation in the United States and a loss at the WTO.

The president has become fixated on automotive trade, viewing it as a major irritant between the US and its trading partners in Asia and Europe.

Fiat, which is part of Fiat Chrysler, also imports some non-luxury cars, although it represents a relatively small part of the company's USA sales.

Daimler, the parent company of Mercedes, issued a profit warning earlier this week following concerns over Trump's trade disputes with China, which are set to see USA import tariffs of 25 per cent placed on certain Chinese goods. He pointed to Daimler's decision on Thursday to pare its profit outlook as an early example.

At a hearing this week, Senator Orrin Hatch, a Republican from Utah, said he was "stunned" that the Trump administration was investigating the national security risk of vehicle imports, which is estimated to affect about $200bn worth of imports. "All of that combined with increasing interest rates is a recipe for disaster".

The group, whose members include European automakers BMW, Volkswagen, Jaguar-Land Rover, Mercedes-Benz, Porsche and Volvo, says automakers favor reducing trade barriers and "achieving fairness through facilitating rather than inhibiting trade". The memo also said the European Union is the largest investor in the USA, accounting for 72 percent of inward foreign direct investment and that EU-headquartered firms employed 3.2 million people in the states. Europe, the Middle East and Africa accounted for little over 21 percent of its global retail sales in the last quarter.

Other reports by GizPress

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