US President Donald Trump has threatened to escalate a trade war with Europe by imposing a 20 per cent tariff on all US imports of European Union-assembled cars, a month after the administration launched an investigation into whether auto imports pose a national security threat.
The EU yesterday slapped revenge tariffs on iconic US products, including bourbon, jeans and motorcycles, in its opening salvo in a trade war with US President Donald Trump.
The United States has granted exemptions to some products from Japan and four other countries from its additional tariffs on steel imports, the Commerce Department said Wednesday.
Some U.S. dealers carrying imported brands appeared sanguine about the potential impact on their business of new tariffs. BMW's plant in Spartanburg, South Carolina, is its largest in the world and exports almost 3 out of 4 SUVs it makes.
Trump responded to the news about the new tariffs the way he usually responds to world events, with a Tweet.
"You're already going to see prices going up incrementally as a result of the steel and aluminium tariffs in the auto sector", said Lusk, whose group represents foreign-branded auto dealers in the US.
Now, pricey European convertibles are among the vehicles that could become rare on American roads if Trump's proposal to slap tariffs on imported cars takes effect.
The U.S. Commerce Department is investigating whether imports of automobiles and auto parts pose a risk to national security. The government moved forward with tariffs on imported aluminum and steel, prompting retaliatory European Union tariffs on a long list of USA products spanning from pants to motorcycles and canoes.
In a speech Thursday in Dublin, Jean-Claude Juncker, president of the European Commission, decried once again what he suggested was unnecessary aggression from the White House. The tariffs will likely go into effect in the run up to the November midterm elections in the US.
"We have a trade war - and it is an escalating trade war", said Mr Robert Bergqvist, chief economist of Swedish bank SEB.
The EU has just slapped tariffs on $3.4 billion in US products, ranging from bourbon to motorcycles, in retaliation for Trump's decision to tax imported steel and tariffs.
But Daniel Price, a former senior economic adviser to President George W. Bush, told The Washington Post that Trump's threat of new tariffs "short-circuited the. process and conclusively undercut the stated national security rationale of that investigation".
Trump's tariff rhetoric further undermines a USA auto market already in its second year of decline after record sales in 2016, said Cody Lusk, president of the American International Automobile Dealers Association.
"A few weeks ago, we thought these issues on trade would fade away", Schuster said.
One of the most frequently discussed items on the E.U.'s list is bourbon, a specialty from the home state of Senate Majority Leader Mitch McConnell (R-Ky.).
Because of high pollution and scorching sunshine, convertibles are not selling in Asia, leaving the United States, Britain and Germany as the largest potential growth markets.
Together with United States tariffs against Mexico and Canada, the trade battles have raised the specter of a global trade war, spooking financial markets that fear major consequences to the global economy. German automakers also want the U.S.to drop its tariff on light trucks, a category that includes SUVs and pickup trucks.
As he sought to reach a denuclearization agreement with North Korea's Kim Jong-Un, Trump has likewise minced no words in chastising his European counterparts.