Currently reading: European commissioner: we will react to US auto trade tariff
After Donald Trump suggests overseas car makers could be charged as much as 20% import tax, Jyrki Katainen said EU will retaliate

The European Union will react to US president Donald Trump's import tax on cars shipped from Europe, a vice-president of the European Commission has warned. 

Jyrki Katainen called for an end to growing tensions between Trump and the EU over trade tarriffs, because the threat of increased cost to export for either party would hurt domestic industries. 

“If they decide to raise their import tariffs, we’ll have no choice, again, but to react. We don’t want to fight in public via Twitter. We should end the escalation,” Katainen said in comments published by French newspaper Le Monde. 

Trump recently renewed his threat to the European car industry, threatening a 20% import tax on cars entering the US from the EU.



It's the latest in a string of outbursts by Trump in relation to trade tariffs, having expressed disappointment previously at the disparity between European car sales in the US and US car sales in the EU

Trump has also previously revealed to French president Emmanuel Macron that he wishes to raise levies on imported cars to 25% and obliterate European luxury car sales in the US. 

Wirtschaftswoche reports that the comments made to Macron, reported to the media via several EU and US diplomats, could spark a trade war between the two sides. Germany’s car industry is a significant source of income to the EU.

Trump has previously expressed his distain at German luxury brands, particularly Mercedes-Benz, and its prominence in New York’s Fifth Avenue. It’s reported that Trump said the tax would be upheld until Fifth Avenue was devoid of Mercedes models. 

Furthermore, Trump has launched a domestic investigation into whether vehicle and automotive parts imports are hindering the US sector’s ability to compete globally. Under the country's Trade Expansion Act of 1962, such a scenario could allow Trump to raise import tariffs to protect national interests.

This was the process undertaken last month when Trump raised tariffs for steel and aluminium imports. Tariffs for those materials now stand at 25% in a move to protect local producers. 

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Currently, the US charges just 2.5% on car imports; this is lower than the EU’s 10% and China's 25%, although the latter will lower its tariff to 15% from 1 July. Trump had previously described China’s unusually high import tariff as “stupid trade”.

Although a large portion of the US’s most popular car models, including those from foreign brands (such as the upcoming BMW X7), are already manufactured within its borders, many are imported from outside the country. Most come from Asia, but several European brands, including Land Rover, don’t have US factories.

The US is the largest export market for cars built in the EU. Last year, £171 billion worth of cars were exported from the EU, with the US accounting for 25%. Of those, just over half were exported by German car makers.

Top 10 best-selling cars in Britain

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.

Although China is the world’s largest new car market, with 23.9 million vehicles sold there last year, the US remains a core focus for most global brands. In 2017, 17.2m vehicles were sold in the US, compared with 15.6m in the EU and European Free Trade Association countries.

Felipe Munoz, global analyst at JATO Dynamics, said: “While German-made cars accounted for 4% of Q1 18 US sales, American-made cars made only 1.3% of German registrations in the first quarter. Most of the units imported from Germany are premium cars, which tells a lot about the position of American car industry in the premium market. Germans are the world’s leaders in the premium market as they hit before American and Japanese cars, and have been evolving fast, with large ranges of products.

“Any attempt to increase taxes on German cars would have a larger effect on BMW and Mercedes, and a lower effect on Volkswagen, as most of the sales of the premium brands correspond to imported models (63% for Mercedes and 64% for BMW). It would also hurt the operations of Porsche, which imports all of its cars from Germany. If the trade conditions get tough for German imported cars, this would have a bigger effect on sedans and sport cars, which are the largest part of their imports. As these segments don’t grow anymore, both BMW and Mercedes could consider axing some of the models or increase local production of SUVs.”

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ianp55 23 June 2018

Trump's Proposed Import Taxes

I wonder if Trump realizes what a major source of US car exports are provded by BMW and Mercedes Benz from their US plants,the large SUV's such as the X3 & GL are only built there and contribute far more to US car exports than Cadillac & Lincoln. If the EU retaliates with it's own tarrifs or relocates production from the US,it might be counter productive

Ski Kid 24 June 2018

The EU are very foolish

Agree Mercedes and BMW make many suv cars in the USA and unbelievably they still pay 10% duty on the USA exports to the EU and have put up with this for decades and only charge 2.5% on imports,Trump probably wants payback time or just _issed off with the situation and as a European  I can see his point also same thing with China.

Ski Kid 23 June 2018

Trump is quite correct-

For the last 30 to 40 years the Yanks and Brits have been screwed over left ,right and centre form both the China and EU. The EU charging 10% duty on imports from the USA and the Yanks only charging 2.5% on all those German cars, the previous Presidents should be shot for letting this absurd inbalance to have continued and at the same time let the Chinease boom to such an extent they present a potential greater threat in the next 20 years.

The Brits ar ea  soft touch letting factorie sclos efor the jobs to be then exported to cheaper European countries etc. Ford closed the transit van factory in southampton Uk and had EU grants to build them in Turkey,and they ar enot even in The EU.

I think Trump has some questionable morals and certainly puts a red rag to a bull,but I almost grudjingly have to admit he is on the ball with failed past strategic strategy.

Peter Cavellini 23 June 2018

Popular thought...

 What’s the best selling Car in the US......?, is it an American brand....?, and if it not, and I know it isn’t,why isn’t there an American brand at number one seller in America?