9

The threat of (more) US tariffs on EU cars has been making the news again today:

President Donald Trump said Tuesday night that the U.S. would slap a 25 percent tariff on cars coming from the European Union.

The president's statement came hours after The Wall Street Journal reported that Commerce Secretary Wilbur Ross said he had postponed an August timeline to publish a report on auto tariffs.

"We're going to put a 25 percent tax on every car that comes into the United States from the European Union," Trump said at a campaign rally in West Virginia.

Ross told The Journal that it wasn't clear that a report on potential tariffs would come out by the end of August. The Commerce secretary also declined to set a new timeline, according to the newspaper. He said the report was being delayed because of ongoing negotiations with Mexico, Canada, and the European Commission.

Note: as user3000140 correctly pointed out below, Trump's comments were taken out of context, as he was referring to his threats before the meeting with Juncker. But I still think the question is generally valid, since Section 232 investigation into cars is continuing.

So, has the EU said anything publicly in response?

In July Trump had agreed to put this threat on hold. Actually back then there was a technical analysis by the EU:

Auto tariffs at the level Trump has threatened would add about 10,000 euros (US$11,700) to the sticker price of a European-built car sold in the U.S., according a European Commission assessment obtained by Bloomberg News last month. That would cut U.S. imports of European cars and car parts in half, the commission forecast.

That isn't big news. I want to know if the EU is going to do anything (else) to prevent it or if the EU threatened more tariffs of their own in return.

  • Must the reaction be from EU institutions or do you accept comments by individual member states or their officials? – JJJ Aug 22 '18 at 11:10
  • @JJJ: If it sheds more light than "we're preparing a list", which we already know the EU commissioner said. – Fizz Aug 22 '18 at 11:20
  • Is there data on the size of the issue? I know German manufacturers have factories in the US and Mexico for the US market. Is that totally different in France & UK, or is this actually a non-issue that affects very few car imports? – janh Aug 22 '18 at 11:47
  • 1
    FWIW, media reports this morning suggested that the EU was being deliberately quiet on the topic. – Relaxed Aug 22 '18 at 21:51
6

Yes, the EU put out a written statement on June 29, 2018. The document is titled: Comments by the European Union to the Bureau of industry and Security, Office of Technology Evaluation, U.S. Department of Commerce. The comments seem to make the economic argument for the US that it would be a bad decision to go through with imposing those tariffs. The first paragraph from its conclusion:

The above analysis confirms that restricting imports of cars, light trucks and car parts under Section 232 would be counterproductive, as protective measures would undermine US growth, negatively impact job creation, and not improve the trade balance. Automobiles and automotive parts imported from the EU and other parts of the world do not threaten US producers’ ability to satisfy national security needs, or even the long term viability of the sector serving civilian customers. Imports from Europe and elsewhere have not prevented a healthy US automobile and automotive parts industry from expanding its footprint and recovering well from the Great Recession of 2008. In fact imports have grown alongside US production—covering largely different product segments. Raising tariffs will make the required imports more expensive and therefore potentially jeopardise up to 1 million jobs in manufacturing and 3.3 million jobs in retail trade.

The comments also contain a warning:

Regarding the question of the legitimacy of potential trade restrictive measures, the European Union would like to recall that no exception in the WTO's General Agreement on Tariffs and Trade (GATT) can justify import restrictions taken by a developed country for the purpose of protecting a domestic industry against foreign competition, unless they are taken in the form of permitted trade remedy measures.

[...]

The European Union would therefore caution the United States against pursuing a process which could result in yet another disregard of international law, which would damage further the reputation of the Unites States and which the international community cannot and will not accept.

To put these comments into context, they were sent on June 30, a few days after president Trump threatened to impose 20% tariffs on cars imported from the EU. The tweet by which this threat was announced contained the following:

Based on the Tariffs and Trade Barriers long placed on the U.S. & its great companies and workers by the European Union, 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 U.S. Build them here!

2

Back in July there was a rather non-specific threat of retaliation:

Ms Malmstrom [the EU’s trade commissioner] said that there would be further retaliation on cars.

“If the US would impose these car tariffs that would be very unfortunate. We are preparing together with our member states a list of rebalancing measures there as well. And this we have made that clear to our American partners. It is done in the same way as with steel and aluminium,” she said.

And in the full statement (video) she said that EU steel and aluminium exports were worth 6.4bn euros; cars and car parts more than 50bn. I'm guessing that's a reason why the retaliation list will take some work. (US exports to the EU in total are about 250bn euros.)

(I'll accept a better answer if something else is known.)

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There has been no EU reaction because the article you quote is wrong.

The CNBC article is misinterpreting what Trump said. This is the main reason no reputable news source picked up the story.

You can watch the rally here https://www.youtube.com/watch?v=3dFvGZToi2w

The interesting stuff about eu tarrifs starts at 1:20:47. If you listen closely you realise that Trump is just telling people what happened at his meeting with Juncker. This is obvious when he said And then I got a call: 'Mr president when can we meet?'. It's clear that all the tariff stuff was what he said in the past.

Don't trust CNBC.

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    Yeah, he said "we're working on a deal" after recounting that. Nevertheless section 232 investigation on cars continues, so my question is still somewhat valid, even if less newsworthy. – Fizz Aug 22 '18 at 12:14
  • I agree with the statement Don't trust CNBC – Dheeraj M Pai Oct 29 '18 at 14:13

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