Trump threatens 20% tariff on European Union cars

Catoctin Creek Distillery whiskey is on display in Purcellville Virginia. The European Union on Friday will start taxing a range of U.S. imports including whiskey

President Donald Trump fired back immediately, repeating his threat to impose tariffs on European vehicle exports to the United States.

While the European Union tax on imported goods in the United Kingdom will be collected by HMRC, with some of those duties staying within the country, the cost for importers, such as wholesale firms and supermarkets, will rise - and is likely to be passed on to consumers.

US President Donald Trump threatened today to impose a 20 per cent tariff on cars imported from the European Union, after the bloc's additional tariffs on dozens of American products took effect.

President Donald Trump threatened tariffs on European Union-made cars Friday, saying that he was willing to impose a 20% levy, citing barriers to American exports and the need for incentives to move production to the U.S. The EU will now impose a 25 per cent tariff on all motorcycles above 500 cc which are being brought in from the United States. He argues the glut of steel and aluminium products entering the U.S. also pose a security threat.

The tariff could hike new auto prices by thousands of dollars on popular models from automakers such as BMW, Mercedes-Benz, Volkswagen, Volvo, Audi, Buick, Honda, Jaguar, Jeep, Fiat, Land Rover, and Porsche.

But the automakers who would be most affected by the tariffs already build a lot of their cars here.

The auto chiefs were hoping to develop a plan that would scrap all tariffs on auto imports between the U.S. and the European Union and it appeared as if Grenell was on board. Shares of US automakers Ford Motor Co and General Motors Co shares fell immediately after Trump's tweet but rebounded and were trading higher. The Commerce Department plans to hold two days of public comments in July on its investigation of auto imports.

On May 23, Trump instructed Commerce Secretary Wilbur Ross to investigate whether or not auto imports "threaten to impair the national security".

He said the probe alienates allies and tariffs would lead to job losses and increased costs in the US.

European Commission President Jean-Claude Juncker, who has said the bloc would target "Harley-Davidson, bourbon and Levi's jeans", said on Thursday the United States decision "goes against all logic and history".

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

The exemption applies to seven US -based companies importing steel products from Japan, Sweden, Belgium, Germany and China, the department said.

The EU tariffs, which took effect at midnight (2200 GMT Thursday) according to the EU's official journal, will further fuel jitters on world stock markets that are already alarmed by trade tensions between the United States and China.

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.

That 25% "chicken" tax has been in place since 1964, when the Lyndon Johnson administration initially applied it as punishment for Europe's tax on USA chicken imports, but the protectionist measure outlived that conflict. "Automakers support reducing trade barriers across the board and achieving fairness through facilitating rather than inhibiting trade".

Brussels imposed the raft of duties on 2.8 billion euros (US$3.3 billion) of U.S. products in a tit-for-tat response to Trump's decision to slap stiff tariffs on European steel and aluminum exports. But those European automakers also ship some of the cars they sell in the United States from Europe.

"The basis for future agreements between the European Union and the US must be the rules of the WTO", the German auto industy group VDA said in a statement Thursday. The president has openly lamented the number of Mercedes-Benz logos he sees prowling Fifth Avenue and criticized Germany this week for snubbing American-made Ford vehicles.

The tariff proposal has drawn sharp condemnation from Republican lawmakers and business groups.

Juncker said on Thursday that the U.S. decision to impose tariffs "goes against all logic and history". He also hit China with tariffs on $200 billion worth of goods on Tuesday, igniting fears of a trade war with the economic powerhouse.

In 2017, the U.S. accounted for about 15% of worldwide Mercedes-Benz and BMW brand sales.

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