EU fights back over Trump’s plans for vehicle import tariffs

13 March 2018

EU fights back over Trump’s plans for vehicle import tariffs

13 March 2018

US President Donald Trump’s tariffs on steel and aluminium imports began a war-of-words with the European Commission, and the automotive industry looks set to be a key battleground.

Trump’s plans to increase import charges is a move to protect US industry which is suffering under the number of European and Asian vehicles coming into the country’s market. The news brought ire from the German auto industry, and now the EU Commission has had its say.

‘In some places, trade has been blamed for the pains of globalisation, others use it as a scapegoat and insist that we can hide behind walls and borders,’ EU Trade Commissioner Cecilia Malmstrom said at a conference in Brussels. ‘And just recently we've seen how it is used to threaten and intimidate us. But we are not afraid; we will stand up to the bullies.’

When asked by journalists to respond to Trump's accusations that the EU is imposing barriers to US automakers, Malmstrom said that: ‘It is hard to argue on Twitter over these issues, but the European Union is a very open market.’ The continent does impose a 10% levy on US car imports, while the US charges a 25% tariff on trucks and pick-ups.

Eliminating these tariffs was the subject of the negotiations for a free trade agreement between the EU and the US which stalled under Trump, according to Malmstrom.

A number of automakers also spoke out about Trump’s tariff outburst at the Geneva motor show.

‘Everybody would lose,’ Volvo CEO Hakan Samuelsson said. ‘This includes Volvo because our whole system is based on free trade. And the consumers would lose out because they will have more expensive goods, including cars.’

Didier Leroy, chairman of Toyota Motor Europe, added, ‘If there is some tax, it will raise the price, and the customer pays the bill. Then you have potential reaction from China, Europe, and other places in the world, and there is no winner.’

PSA Group CEO Carlos Tavares also suggested that the move would put the company’s plans to reintroduce its brands in the US under risk. ‘[Tariffs] would have an impact on the way we go to market because we have a very staged and step-by-step approach. In the beginning, we would source the cars from outside the US given the very limited volumes. If this were to change, we would have to reassess our strategy,’ he said.

Manufacturers are already speaking out about tariffs in relation to Brexit, warning that any deal which does not include free trade would mean prices rising on vehicles as they would not be able to absorb the additional costs. This could also impact factories in the UK, with vehicles exported to Europe all subject to charges. However, more and more vehicles from European companies are built in the US. Combined, factories of German manufacturers produced 804,000 vehicles, with 430,000 exported from the US. Meanwhile, the country imported 494,000 vehicles, meaning a gap of just 64,000 vehicles.