After the entry into force the same day of “rebalancing measures” from the European Union in response to US taxes of 25% on steel imports and 10% on imports of aluminium, the US President, Donald Trump, threatened to impose custom duties of 20% “on all EU cars” if it does not get rid of its trade barriers.
In a message published on his Twitter account in the afternoon, Mr Trump threatened “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.”
Mr Trump has already brandished the threat of import taxes to protect the US car industry, particularly targeting Germany, whose trade surplus he has lambasted in comparison to that of his country and he has denounced the EU taxes on cars that are clearly higher than those from the US.
Mr Trump requested his US trade secretary, Wilbur Ross at the end of May to open an enquiry under section 232 of the Trade Expansion Act of 1962 on vehicle imports, including lorries and spare parts, in an effort to calculate their impact on national security (see EUROPE 12026).
EU customs tariffs on car imports from third countries are 10%, while those from the EU on European cars stand at 2.5%. Nonetheless, the US does impose duties of up to 25% on imports of lorries and pick up trucks, while the EU’s taxes on these products are on average 14%.
€2.8 billion worth of US products targeted
The EU’s first re-balancing measures certified by EU countries and notified to the World Trade Organisation (WTO) in response to US taxes on steel and aluminium are targeting steel, aluminium and agricultural products, as well as a number of different US products, which will be hit by an additional 25% in duties for the majority of these products and by 10%, 35% or 50% for others and which are initially worth around €2.8 billion (see EUROPE 12042).
At a later stage, three years or before the end of this deadline, if it wins its case at the WTO as part of its appeal filed on 1 June (see EUROPE 12032) - the EU will impose a further €3.6 billion worth of duties on these US products, which will then be worth a total of €6.4 million and which corresponds to the total amount of EU steel and aluminium products to the US in 2017.
The products targeted are for the most part emblematic products manufactured on US territory, particularly in agricultural states that voted for Mr Trump.
“Accepting quotas to obtain absolution”
During a speech to the European Parliament on 20 June, the director-general of DG Trade at the Commission, Jean-Luc Demarty, exclaimed, “We were ready to commit to a positive trade agenda with an exclusively tariff (liberalisation) perspective for industrial goods, but on the US side there was no reaction. I attended 15 audio conference meetings with Trade Commissioner Cecilia Malmström and US Secretary Ross. Mr Ross kept repeating at length that hard quotas were needed to limit exports of steel and aluminium from the EU, in order, on his terms, ‘to get absolution’... As if we were sinners!”. (Original version in French by Emmanuel Hagry)