US President Donald Trump has threatened to impose new tariffs on EU cars as anxieties escalate over a possible trade war that he has said would be a good thing.
Two days after he announced a 25pc levy on steel imports and 10pc tax on aluminium, Mr Trump responded to threats of retaliation from various countries by saying he would step up any tit-for-tat measures.
“If the EU wants to further increase their already massive tariffs and barriers on US companies doing business there, we will simply apply a tax on their cars which freely pour into the US,” he said. “They make it impossible for our cars (and more) to sell there. Big trade imbalance!”
The EU had warned on Friday it was considering imposing its own tariffs on a range of US products running from Levi’s jeans to Harley-Davidson motorcycles and bourbon.
“We will put tariffs on Harley-Davidson, on bourbon and on blue jeans – Levi’s,” European Commission President Jean-Claude Juncker said on German television.
The United States imposes a 2.5pc tariff on cars assembled in Europe and a 25pc tariff on European-built vans and pickup trucks. Europe imposes a 10pc tariff on US-built cars.
German automakers Volkswagen, Daimler and BMW build vehicles at plants in the US. BMW employs more than 9,000 workers in South Carolina and is one of the state’s largest employers.
The US accounts for about 15pc of worldwide Mercedes-Benz and BMW brand sales, while it accounts for 5pc of VW brand sales and 12pc of Audi sales.
The US had a $22.3bn automotive vehicle and parts trade deficit with Germany in 2017 and a $7bn deficit with the UK, according to US government data.
Mr Trump’s announcement on steel and aluminium has drawn condemnation across the globe, with several countries threatening retaliation if he imposed the duties. Canada was one of several countries to promise it would enact similar measures, while China called for restraint.
Electrolux, the Swedish appliance manufacturer, announced that it was delaying a $250m (€203m) investment to expand and modernise a plant in Springfield, Tennessee, while it awaited further details of Mr Trump’s proposals.
The announcement was particularly noteworthy because Electrolux already purchases all the steel it uses for its American products in the US.
“We are putting it on hold. We believe that tariffs could cause a pretty significant increase in the price of steel on the US market,” said company spokesman Daniel Frykholm.
Mr Juncker said: “We would like a reasonable relationship to the United States, but we cannot simply put our head in the sand.”
Earlier yesterday, Mr Trump claimed on Twitter the US had an annual $800bn (€649bn) deficit as a result of “very stupid” trade deals and policies.
“Our jobs and wealth are being given to other countries that have taken advantage of us for years.
“They laugh at what fools our leaders have been. No more,” he wrote.
While many economists have warned of the dangers of a trade war and US stock markets tumbled after Mr Trump’s announcement, the president has tried to claim it would help the country.
“When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win,” he tweeted on Friday.
Reuters said many economists believe rather than increasing employment, price increases for consumers of steel and aluminium, such as the auto and oil industries, will destroy more US jobs than they create.