President Donald Trump on Friday threatened in a tweet to unilaterally impose a 20 percent tariff on all automobile imports from Europe, further breaking from Republicans in Congress and front-running an investigation he had ordered from the Commerce Department into whether these imports harm national security.
It was the first time he had threatened to impose a specific level of tariffs on automobiles from Europe.
The tweet came as Europe imposed tariffs on goods worth $3.2 billion -- including Harley-Davidson motorcycles and Levi's jeans -- which are themselves a targeted response to Trump's earlier decision to impose steel and aluminum tariffs on European exports to the United States.
Trump and Peter Navarro, one of his top trade advisers, have long believed that the European Union has an unfair tariff on U.S. exports while the U.S. government makes it relatively easy for other countries to send their cars here.
The European Union charges a 10 percent tariff on auto imports from the United States. Trump is threatening to impose a tariff double that size if the EU doesn't remove its barriers.
Last month, Senate Foreign Relations Committee Chairman Bob Corker, R-Tenn., called Trump's idea of imposing tariffs on auto imports "dangerous" and led an effort on Capitol Hill to strip away some of the White House's authority.
So far, Congress has does done little to check Trump's authority in this area, but members with constituencies that are most vulnerable to rising tariffs expressed their concerns. Rep. Bradley Byrne, R-Ala., represents the port of Mobile, and his state is home to many foreign auto plants. "So it's a big deal for my state, it's a very big deal," he said. "So I'm worried about these tariffs."
"These are a lot of jobs, and I'll tell you I know a lot of those people in those plants, they all voted for Donald Trump. These are Trump voters. ... He would not be acting in their best interests."
Nonetheless Byrne said persuasion is better with the White House than legislation, which he called "a pretty blunt tool in trade to use legislation."
The U.S. imposes a 2.5 percent tariff on auto imports from Europe, and a 25 percent tariff on light-truck and van imports.
The U.S. imported $62.5 billion in autos and auto parts from the European Union in 2017, according to U.S. Census data, and a 20 percent tariff on those goods could drive up their costs for consumers.
Trump has long believed that U.S. workers and companies are ripped off by other nations, which flood the U.S. market with cheap goods while imposing large barriers to make it hard for U.S. companies to compete overseas. He has demanded reciprocity. A number of countries, including several in Europe, have shown a willingness to negotiate, but many have so far rebuffed Trump's take-it-or-leave-it demands.
Meanwhile, Trump's economic team is stretched thin, working on trade-related actions or discussions in multiple countries around the world simultaneously.
Trump had a messy showdown with leaders from Europe and Canada at a recent Group of Seven meeting. French leader Emmanuel Macron has accused Trump of being protectionist and isolationist, and Trump has had a chilly relationship with German Chancellor Angela Merkel. Germany is the largest European manufacturer of automobiles, though German companies have a huge presence in the United States, with large factories in South Carolina and Tennessee.
It is difficult for the White House to unilaterally impose tariffs without input from Congress, but Trump has found several ways to do it this year. Several weeks ago, he ordered Commerce Secretary Wilbur Ross to launch what's known as a "232" investigation. If this investigation finds that the "national security" of the United States is compromised by a reliance on imports, then tariffs can be imposed.
Trump used a similar tactic to unilaterally impose tariffs on aluminum and steel imports from a number of countries, angering a number of U.S. lawmakers but also his foreign counterparts in Europe, Canada, Mexico, Japan, and a number of other countries.
"By linking the threatened imposition of U.S. tariffs to EU tariffs imposed on U.S. autos, the President has both short-circuited the 232 process and conclusively undercut the stated national security rationale of that investigation," said Daniel Price, a former senior economic adviser to President George W. Bush.
The new EU tariffs are intended to retaliate for Trump's steel and aluminum tariffs, which EU leaders have declared illegal on numerous occasions and are contesting before the World Trade Organization.
Big River Steel, which has a $1.3 billion steel mill near Osceola, does not comment on trade policies or tariff issues, a company spokesman said. An executive with Nucor Corp., which has had two steel mills near Blytheville for years, did not return a phone call seeking comment about tariffs.
But Clif Chitwood, Mississippi County's economic development developer, said the tariffs won't have a great effect on the steel industry in the country.
"We import about 20 percent of our steel," Chitwood said.
The country has been in a trade war for 30 years, but it hasn't been fighting it, Chitwood said.
"Except for most of the big cities, much of the country looks like it has lost a war," Chitwood said. "Abandoned buildings, abandoned homes and abandoned factories. So I think it is time for the United States to bring some rationality and fairness to its trade practices."
Information for this article was contributed by David Smith of the Democrat-Gazette.
Business on 06/23/2018
Print Headline: U.S. threatens 20% tax on EU autos