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EU Says it Will Respond to Any Auto Tariff Move Made by the US

A senior European Commission official has said that the European Union will respond to any attempt made by the US at raising tariffs on cars made in the bloc. On Friday, President Donald Trump threatened to enforce a 20 percent tariff on all EU made cars. The announcement came a month after his administration began investigations on whether auto imports were a threat to national security.

The EU’s Vice President asserts that if the US raises the import tariffs, they will have no choice but to react. He added that they do not want to use Twitter to fight over trade. In the wake of Trump’s tariff threats, there was a sharp fall in the European Autos Stocks Index. The fall also affected Ford Motor Co as well as General Motors.

Trump had earlier tweeted that if there lacks an immediate breakdown and removal of tariffs and barriers, then he will have to place a 20 percent tariff on all cars coming into the US. The US commerce Department has until February 2019 to inspect whether the importing of automobiles and auto parts poses a threat to the U.S. national security.

On May 11, Trump addressed a carmakers meeting in the White House and alerted them on his plan to impose additional tariffs. He also criticized the automotive trade with Germany. Presently, the US imposes a 2.5 % tariff on all passenger cars coming from the EU and 25% on pickup trucks. On the other hand, the EU levies 10% tariff on cars imported from the US.

The tariff proposal has been condemned by Republican lawmakers and business people. Additionally, a representative group of carmakers in the US and foreign countries have said that they areconfident that importing vehicles is not a risk to national security.

Figures from the US Chamber of Commerce suggest that there has been a double growth of the auto production industry in the past decade. Thus, imposition of higher tariffs would affect the sector immensely yet it is the same industry that the government purports to protect.

Interestingly, car makers from Germany such as Volkswagen, Daimler AG make vehicles at their plants located in the US. For instance, BMW happens to be one of the largest employers in South Carolina and has more than 9,000 workers from the state. Moreover, in 2017, the United States accounted for up to 15 percent of the worldwide sales for Mercedez-Benz and BMW. The US also accounted for 5 percent and 12 percent of Volkswagen’s VW brand and Audi brand sales respectively.