World Economy

Trump Threatens 20% Levy on All European Cars

Trump Threatens 20% Levy on All European CarsTrump Threatens 20% Levy on All European Cars

US President Donald Trump threatened a 20% tariff on cars imported from the European Union unless the bloc removes import duties and other barriers to US goods, escalating a global trade war the EU warned could endanger $300 billion in commerce.

“Based on the tariffs and trade barriers long placed on the US and 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 US. Build them here!” Trump said in a tweet on Friday.

The EU planned to retaliate, according to a European Commission memo obtained by Bloomberg. “An introduction of US tariffs would be met with equivalent penalties imposed by affected trading partners,” it said.

Shares of Volkswagen AG, Daimler AG and BMW AG fell in Frankfurt, and US auto companies erased earlier gains in New York trading.

Trump’s tweet came hours after the EU imposed tariffs on about $3.3 billion of American products in response to his barriers to imported aluminum and steel.

The European tariffs target politically resonant products, including 25% duties on Harley-Davidson Inc. motorcycles, Levi Strauss & Co. jeans and several other products. The EU measures cover a total of around 200 categories, also including various types of corn, rice, orange juice, cigarettes, cigars, t-shirts, cosmetics, boats and steel.

Trump’s latest salvo against the European auto industry threatens to broaden a trade war that he’s already sparked with China. The US has pledged to impose 25% tariffs on $34 billion in Chinese goods on July 6, and China vowed to retaliate in the same amount of US imports.

The US may justify the auto tariffs on the grounds of national defense, just as it did in March when imposing duties on global imports of steel and aluminum. Trump initially exempted the EU from the metal tariffs, but let the temporary reprieve expire after negotiations with the Europeans fell apart.

The US Commerce Department in May started investigating whether imports of cars and light trucks hurt America’s ability to defend itself by eroding the country’s auto industry. If the findings show a threat to the US, a 1960s-era trade law gives the president authority to impose import restrictions without congressional approval.

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