Published: Fri, June 22, 2018
Finance | By Gustavo Carr

Trump threatens 20% tariff on European Union cars

Trump threatens 20% tariff on European Union cars

The European Union's retaliatory tariffs come into force today targeting American products, including whiskey, motorcycles and peanuts.

More than $3 billion worth of USA goods - from bourbon and corn to Harley Davidson motorcycles - are now under a 25 percent tariff in the European Union, in retaliation for the Trump administration's tariffs that hit the EU, Mexico and Canada earlier this month.

In an interview with Business Insider Germany last week, Bernhard Mattes, the president of German Association of the Automotive Industry (VDA), said that tariffs would not only hurt European automakers but the United States economy as well.

The tariffs come weeks after the Trump administration implemented a 25 per cent tariff on steel and 10 per cent tariff on aluminium imports in March.

A transatlantic trade battle could open a second front in a global trade war, with much at stake: The United States and the European Union trade just over €1 trillion ($1.2 trillion) in goods and services each year.

John Murphy, a senior vice president at the U.S. Chamber of Commerce, estimates that $75 billion in U.S. products will be subject to new foreign tariffs by the end of the first week of July. The higher tariffs had previously been registered with the World Trade Organization (WTO).

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"We've never seen anything like this", said Mary Lovely, a Syracuse University economist who studies global trade - at least not since countries tried to wall themselves off from foreign competition during the Great Depression. MORE, Trump's former top economic advisor said last week the president had expressed an interest in only having cars in the USA that were made here.

The trade war risks significantly raising prices for consumers.

The tariffs, which took effect at midnight, further fuelled jitters on world stock markets that were already alarmed by trade tensions between the United States and China.

Trump ran for the presidency on a vow to topple seven decades of American policy that had favored ever-freer trade among nations.

"Based on the Tariffs and Trade Barriers long placed on the US and it 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", Trump tweeted. The big trade conflagration, however, is with China.

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