Tess Torelli March 3, 2018

President Donald Trump threatened to hit car exports from the European Union with a retaliatory tax, escalating a brewing global fight with U.S. trading partners triggered by newly announced 25 percent U.S. tariffs on imported steel and aluminum.

In a post on Twitter, Trump cited a “big imbalance” between the two countries, said if the 28-nation bloc insisted on imposing punitive taxes on U.S. goods, America would strike back on European car exports. It was an apparent response to European officials threatening policy changes of their own in the wake of Trump’s sudden pronouncement on metal imports.

“If the E.U. wants to further increase their already massive tariffs and barriers on U.S. companies doing business there, we will simply apply a tax on their cars which freely pour into the U.S.,” the president said on Twitter.

That could spell trouble for car manufacturers like Volkswagen and BMW, two of the most popular European brands sold in the U.S. The German luxury car maker also manufactures many of its cars in America, shipping billions of dollars worth abroad.

In 2016, the EU shipped more than 6 million cars abroad, and the U.S. — its largest market by far — absorbed more than 1 million of those, according to the European Automobile Manufacturers Association.

Each year, the U.S. imports more from Europe than the continent absorbs in American goods, to the tune of a trade deficit worth more than $11 billion in 2017, according to U.S. Census data.

Trump’s hasty decision to impose tariffs on steel imports has stoked talk of a brewing trade war, roiling both the political establishment and the global economic order. The move also prompted E.U. trade chiefs to weigh hitting a broad array of U.S. imports with a 25 percent tax, Reuters reported this week.

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