The escalating economic conflict with the European Union is proving unsafe for American auto companies.
President Donald Trump on Friday renewed his threat to slap steep tariffs on imports of European-built cars such as BMWs, Mercedes-Benzes and Audis, another warning sign of a brewing worldwide trade war.
The EU trade commissioner has acknowledged that the EU targeted some iconic American items to put political pressure on U.S. President Donald Trump and senior U.S. politicians.
Earlier, China underestimated President Donald Trump's resolve to move forward with tariffs unless Beijing changes its "predatory" trade practices, a top U.S. trade advisor said on Tuesday, in comments that diminished the chances of a negotiated settlement to a looming trade war between the world's economic superpowers.
In fact, the United States is the largest export market for cars built in the EU. "Any attempt to increase taxes on German cars would have a larger effect on BMW and Mercedes, and a lower effect on Volkswagen, as most of the sales of the premium brands correspond to imported models (63% for Mercedes and 64% for BMW)". With Trump's latest salvo, he threatened tariffs on up to $450 billion in China's exports, out of a total of just over $500 billion in goods sold to the United States. Beijing has vowed to immediately retaliate with its own tariffs on USA soybeans and other farm products.
The move against China could raise prices for American consumers and businesses and hit global supply chains for industries like carmakers and electronics.[ nL4N1TO1AX] Chinese reprisals have hit American farmers already.
"Of the 1.3 million German cars sold in the United States, more than 800,000 were made on American soil".More news: Disney CEO Bob Iger Comments On The Need For The Fox Deal
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German automakers did not comment on Trump's tweet.
At a hearing this week, Senator Orrin Hatch, a Republican from Utah, said he was "stunned" that the Trump administration was investigating the national security risk of vehicle imports, which is estimated to affect about $200bn worth of imports. "Automakers support reducing trade barriers across the board and achieving fairness through facilitating rather than inhibiting trade".
Trump also previously revealed to French President Emmanuel Macron that he wishes to raise levies on imported cars to 25% and obliterate European luxury vehicle sales in the US. He told automakers at a White House meeting in May that he was planning tariffs on some imported vehicles.
A group representing major USA and foreign automakers 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".
In 2017, the U.S. accounted for about 15% of worldwide Mercedes-Benz and BMW brand sales.
Felipe Munoz, global analyst at JATO Dynamics, said: "While German-made cars accounted for 4% of Q1-18 USA sales, American-made cars made only 1.3% of German registrations in the first quarter".