EU imposes tariffs on US motorcycles, peanuts and whiskey

Saul Bowman
June 24, 2018

Trump's warning comes after the European Union imposed tariffs on United States dollars 3.4 billion in US products, ranging from bourbon to motorcycles, in a tit-for-tat response to US President's decision to slap hefty tariffs on European steel and aluminum exports.

Trump fired off a tweet on Friday morning declaring that if the European Union did not remove existing tariffs on United States auto exports, "we will be placing a 20 percent tariff on all of their cars coming into the USA".

"I wish we would stop invoking national security because that's not what this is about".

German automotive stocks fell after U.S. President Donald Trump threatened to impose a 20 percent tariff on all European vehicle imports into the U.S.

In late May, the USA announced new tariffs of up to 25 percent on steel and aluminum imports from US allies like Mexico, Canada, and the EU.

Germany is the largest European manufacturer of automobiles, though German companies have a huge presence in the United States, with large factories in SC and Tennessee.

The goods targeted include typical American products such as bourbon, peanut butter and orange juice, in a way that seems designed to create political pressure on President Donald Trump and senior USA politicians.

Not surprisingly, shares of all global automakers, including BMW, Volkswagen, Fiat Chrysler, Daimler, Ford and General Motors all fell on the tweet. Shares of USA automakers Ford Motor Co and General Motors Co shares fell immediately after Trump's tweet but rebounded and were trading higher.

Trump's message comes two days after Commerce Secretary Wilbur Ross said that no decision has been made about tariffs on automobiles, according to CNBC. That investigation is ongoing, but Ross told a conference on Thursday he expects the national security investigation into automobiles to conclude by late July or August.

German auto industry association VDA said Germany exported 657,000 cars to North America, 7 percent less than a year earlier, and 200,000 fewer cars than in 2013.


Bill Reinsch, senior adviser at the Center for Strategic and International Studies in Washington and former Commerce official, said the president's tweet may undermine his government's argument for auto tariffs.

Tariffs fell out of favor as global trade expanded after World War II. The Wall Street Journal reported that Richard Grenell, the USA ambassador to Germany was to present the offer to Trump this week.

American farmers still bear the brunt of Beijing's planned tariffs. Trump has slammed USA automakers for manufacturing vehicles overseas.

The new duties have been imposed as tensions over trade continued to grow between the United States and China.

"The people of Germany are turning against their leadership as migration is rocking the already tenuous Berlin coalition, " Trump tweeted earlier this week. "Automakers support reducing trade barriers across the board".

President Donald Trump, left, reportedly told French President Emmanuel Macron that he wants to rid the USA of German cars. He has frequently criticized both allies and adversaries for imposing tariffs and trade barriers on American goods.

FILE - Cars for export stand in a parking area at a shipping terminal in the harbor of the northern German town of Bremerhaven, Oct. 8, 2012. He told automakers at a White House meeting in May that he was planning tariffs on some imported vehicles.

The tariff proposal has drawn sharp condemnation from Republican lawmakers and business groups.

"You're already going to see prices going up incrementally as a result of the steel and aluminum tariffs in the auto sector", said Mr Lusk, whose group represents foreign-branded auto dealers in the US "All of that combined with increasing interest rates is a recipe for disaster".

Duties of 25 per cent "could be expected roughly to reduce United States imports of auto and vehicle parts in half", the European Commission wrote in a memo obtained by Bloomberg.

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