US President Donald Trump has threatened to impose a new tax on imported cars from Europe if the European Union takes retaliatory measures over the newly announced steel tariffs.
Speaking through Twitter, Trump said: “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.
“They make it impossible for our cars )and more) to sell there. Big trade imbalance!”
If the E.U. wants to further increase their already massive tariffs and barriers on U.S. companies doing business there, we will simply apply a Tax on their Cars which freely pour into the U.S. They make it impossible for our cars (and more) to sell there. Big trade imbalance!
— Donald J. Trump (@realDonaldTrump) March 3, 2018
Trump has previously been highly critical of multilateral trade deals which he claims are unfair to the US.
He called the North American Free Trade Agreement “the worst trade deal ever”, and generally called US international trade deals “very stupid”.
One of the first decisions he made as president was to take the US out of the Trans-Pacific Partnership, which counts China and Japan among its member nations.
Observers are saying exiting Nafta – which includes Canada and Mexico – could be next.
US automakers manufacture a lot of cars and vehicle parts in Mexico, and Trump has discouraged big automakers from investing there and encouraged them to invest in the US instead.
He said he is considering imposing a 35 per cent import tariff on Mexican autos and parts.
In the latest move, Trump has introduced a 25 per cent tariff on steel imports in an attempt to rebuild the US metals industry.
In comments reported in the Financial Times recently, Trump said: “We’re going to build our steel industry back and we’re going to build our [aluminium] industry back.
“We’ll be signing [an order imposing tariffs] next week. And you’ll have protection for a long time in a while. You’ll have to regrow your industries, that’s all I’m asking.”
Trump was speaking after a White House meeting with industry chief executives.
Trump has been known to speak directly to bosses of manufacturing companies to try and persuade them to move more of their operations to the US.
In one instance at least it seems to be working, with Apple repatriating billions of dollars it had been holding overseas back to the US, and suggesting it would increase its manufacturing base in the US.
However, individual companies may be easier to deal with that entire industries, and steel and aluminium are among the most widely used materials in industry, affecting virtually all manufacturing businesses.
While higher tariffs may or may not help US steelmakers, it could increase the prices of metals for US manufacturers.
That’s even without the EU, China or any other country introducing any retaliatory measures.
Speaking for the EU, Jean-Claude Junker, European Commission president, said: “We strongly regret this step, which appears to represent a blatant intervention to protect US domestic industry and not to be based on any national security justification.
“The EU has been a close security ally of the US for decades. We will not sit idly while our industry is hit with unfair measures that put thousands of European jobs at risk.”
Meanwhile, Chinese foreign ministry spokesperson Hua Chunying said: “If other countries follow in the steps of the US, it will harm global trade.
“China urges the US to abide by multilateral rules and to make contributions to the trade and economic world order.”