Donald Trump threatens 20% tariff on EU cars, targeting Germany
Automotive stocks fell on the news with Ford Motor and General Motors shares off 0.5% and 0.3%, respectively
Washington — US President Donald Trump has threatened to impose a 20% tariff on all EU-assembled cars coming into the US, a month after the administration launched an investigation into whether automotive imports pose a national security threat.
"If these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the US Build them here!" Trump wrote on Twitter on Friday.
Automotive stocks fell on the news. The European Autos Stocks Index fell sharply after Trump’s 20% tariff tweet and was last down 1.25%. Ford Motor shares went into the red and were down 0.5%, while General Motors shares were off 0.3%.
The US commerce department is investigating whether imports of automobiles and automotive parts pose a risk to national security. The deadline for completing the investigation is February, 2019, but US commerce secretary Wilbur Ross said on Thursday that the department aims to wrap up the probe much earlier, by late July or August.
The commerce department plans to hold two days of public comments in July on its probe of automotive imports.
Trump has repeatedly singled out German automotive imports to the US for criticism. At a meeting with car makers at the White House on May 11, Trump told them he was planning to impose tariffs of 20% or 25% on some imported vehicles and sharply criticised Germany’s automotive trade surplus with the US.
The US currently imposes a 2.5% tariff on imported passenger cars from the EU and a 25% tariff on imported pick-up trucks. The EU imposes a 10% tariff on imported US cars.
The tariff proposal has drawn sharp condemnation from Republican lawmakers and business groups. A group representing major US and foreign vehicle makers has said it was "confident that vehicle imports do not pose a national security risk". The US chamber of commerce noted that American automotive production has doubled over the past decade, and said tariffs "would deal a staggering blow to the very industry it purports to protect and would threaten to ignite a global trade war".
German vehicle makers Volkswagen, Daimler and BMW build vehicles at plants in the US. BMW is one of South Carolina’s largest employers, with more than 9,000 workers in the state.
In 2017, the US accounted for about 15% of worldwide Mercedes-Benz and BMW brand sales. It accounts for 5% of VW brand sales and 12% of Audi sales.