US President Donald Trump threatened a 20 percent tariff on cars imported from the EU unless the bloc removes import duties and other barriers to US goods, escalating a global trade war that the EU has warned could endanger US$300 billion in commerce.
“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. Build them here!” Trump said in a tweet on Friday.
The EU planned to retaliate, a European Commission memo obtained by Bloomberg showed.
“An introduction of US tariffs would be met with equivalent penalties imposed by affected trading partners,” it said.
Shares of Volkswagen AG, Daimler AG and BMW AG fell in Frankfurt, and US auto companies erased earlier gains in New York trading.
Trump’s tweet came hours after the EU imposed tariffs on about US$3.3 billion of US products in response to US levies on imported aluminum and steel.
The EU tariffs target politically resonant products, including 25 percent duties on Levi Strauss & Co jeans, Harley-Davidson Inc motorcycles, bourbon and peanut butter.
The EU measures cover about 200 categories, also including various types of corn, rice, orange juice, cigarettes, cigars, T-shirts, cosmetics, boats and steel.
The US might justify the auto tariffs on grounds of national defense, just as it did in March when imposing duties on global imports of steel and aluminum.
Trump initially exempted the EU from the metal tariffs, but let the temporary reprieve expire after negotiations with the Europeans fell apart.
The US Department of Commerce last month started investigating whether imports of cars and light trucks hurt the US’ ability to defend itself by eroding its auto industry. If the findings show a threat to the US, a 1960s-era trade law gives Trump authority to impose import restrictions without congressional approval.
Many US lawmakers have been critical of Trump’s use of the trade law, which was rarely applied before he took office.
US Secretary of Commerce Wilbur Ross on Wednesday during a US Senate hearing faced heated questions from Republican lawmakers who said that there is no merit to claiming that auto imports threaten the country’s defense capabilities.
Trump’s tweet could undermine his government’s argument for auto tariffs, said Bill Reinsch, a senior adviser at the Center for Strategic and International Studies in Washington and former commerce department official.
“Having ordered an investigation into whether auto imports are a national security threat, he has now undercut that by reaching his conclusion before the investigation has barely begun,” Reinsch said.
“It’s a classic case of ‘ready, fire, aim,’ and it will only lead to litigation in the US and a loss at the WTO when we are inevitably taken there,” he said.
Trump’s tariff rhetoric further undermines a US auto market already in its second year of decline after record sales in 2016, American International Automobile Dealers Association president Cody Lusk said.
Daimler’s decision on Thursday to pare its profit outlook was an early example, he said.
“You’re already going to see prices going up incrementally as a result of the steel and aluminum tariffs in the auto sector,” said Lusk, whose group represents foreign-branded auto dealers in the US.
“All of that, combined with increasing interest rates, is a recipe for disaster,” he said.
RESTRUCTURING: Taichung and Taoyuan profited most from local firms moving back high-end manufacturing amid the US-China decoupling of trade ties, the ministry said The government’s “Invest in Taiwan” initiative might this year see NT$627.1 billion (US$21.7 billion) of investment pledges realized, with several firms raising stakes and two dropouts due to customer losses, Minister of Economic Affairs (MOEA) Wang Mei-hua (王美花) said yesterday. Wang made the statement at the monthly meeting of the Third Wednesday Club, a local trade group featuring the top 100 firms of each business sector. Since early last year, the government has launched three programs intended to help local companies grapple with US-China trade rows and the COVID-19 pandemic, mainly through moving production lines back to Taiwan. Thus far, the ministry
JOBS AT RISK? Most Cathay Dragon routes are to be operated by Cathay Pacific or a subsidiary, but it was unclear how Taiwanese workers would be affected Cathay Pacific Airways Ltd (國泰航空) yesterday said it is planning new flight services for Taiwan as it announced a corporate restructuring that included the shutdown of its regional subsidiary, Cathay Dragon (國泰港龍), and could lead to job cuts in Taiwan. Cathay Pacific said the shutdown means that the one round-trip service between Taichung and Hong Kong per day and seven round-trip services between Kaohsiung and Hong Kong operated by Cathay Dragon prior to the COVID-19 pandemic would be terminated. “The parent company is planning a new schedule between Taiwan and Hong Kong,” Cathay Pacific assistant manager for corporate communications Moses Hou (侯恩錫)
OVERHEATED MARKET?: The gauge would be designed to provide more reliable information than private-sector data, and help improve policymaking, the council said The National Development Council (NDC) is considering creating a business climate index on Taiwan’s property market, allowing policymakers to better monitor market movements and intervene if necessary, NDC Minister Kung Ming-hsin (龔明鑫) said yesterday. Kung made the remarks at a meeting of the legislature’s Economic Committee where lawmakers from across party lines voiced concerns about housing price hikes driven by capital repatriation. Kung said that the council is assessing the possibility of creating an index designed to provide more accountable and transparent information than data provided by private-sector market analysts, and could help improve policymaking. The council would compile a report on
STOCK MARKETS TAIEX closes slightly higher The TAIEX closed slightly higher yesterday as market sentiment remained cautious over the Nov. 3 US presidential election. Contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) was again the anchor stabilizing the broader market, preventing the main board from falling into negative territory at the end of the session, dealers said. The TAIEX closed up 14.88 points, or 0.12 percent, at 12,877.25, on turnover of NT$167.982 billion (US$5.81 billion). TSMC, the most heavily weighted stock on the local market, rose 0.44 percent after fluctuating between NT$451 and NT$456. The semiconductor subindex and the bellwether electronics sector