Trump threatens Europe with 'tremendous retribution' as the possibility of massive auto tariffs looms

  • President Donald Trump threatened “tremendous retribution” against the European Union, including tariffs on cars, unless European Commission President Jean-Claude Juncker offers major trade concessions next week.
  • The threat comes as the auto industry ramps up its campaign to try to dissuade Trump from imposing auto tariffs.
  • Republican lawmakers are also attempting to avert any auto tariffs.

President Donald Trump on Wednesday threatened to ramp up the trade conflict with the European Union unless the group’s leaders agree to significant concessions.

During a Cabinet meeting, Trump insisted that European Commission President Jean-Claude Juncker needed to make a major trade offer to lower barriers on automobiles during his trip to the US. Otherwise, Trump said, the US will be forced to hit the EU with trade restrictions.

“We said if we don’t negotiate something fair, then we have tremendous retribution, which we don’t want to use, but we have tremendous powers,” Trump said. “Including cars – cars is the big one. And you know what we’re talking about with respect to cars and tariffs on cars.”

The US Commerce Department is investigating auto imports, and Trump has previously threatened large tariffs on imported cars. Such a move would represent a massive escalation of Trump’s tariffs on the EU and be likely to push the two sides into a full-on trade war.

Tariff deadline approaching

While Trump has throughout his presidency been critical of auto imports, he announced in May that the US would launch an investigation under Section 232 of the Trade Expansion Act. It could result in more tariffs – and likely economic turmoil.

Trump has also directly threatened to impose a 20% tariff on auto imports from the EU.

“Based on the Tariffs and Trade Barriers long placed on the US and its 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,” Trump tweeted in June. “Build them here!”

Many European automakers, including brands like BMW and Mercedes, already produce cars at plants in the US.

Any tariffs on vehicles would be a massive escalation in the trade fight between the EU and the US. In 2017, the US imported just over $US43 billion worth of passenger vehicles from the EU. Any measures on automobiles would dwarf those on steel and aluminium, which affect a little over $US7 billion worth of EU exports to the US.

A hearing on the possibility of auto tariffs is scheduled for Thursday, with dozens of speakers from across the industry set to weigh in. The Commerce Department could then release a recommendation on tariffs within weeks.

‘A massive tax on consumers’

While Trump appears ready for a high-stakes showdown, automakers from around the world begged the president to deescalate the conflict in a letter released Wednesday.

Seven auto-industry trade groups that represent large automakers like Ford, General Motors, and Toyota, as well as dealers and parts manufacturers, said tariffs on imports of auto goods would be damaging to the US economy and American consumers.

Woman factory worker carBill Pugliano / Stringer / Getty Images

“Raising tariffs on autos and auto parts would be a massive tax on consumers who buy or service their vehicles – whether imported or domestically produced,” the letter said. “These higher costs will inevitably lead to declining sales and the loss of American jobs, as well as increasing vehicle service and repair costs that may result in consumers delaying critical vehicle maintenance.”

Almost every major auto manufacturer, from foreign companies like BMW and Hyundai to American brands like GM and Ford, has submitted comments to the Commerce Department warning about the possible effect of tariffs on US auto workers and consumers.

Lawmakers push back

Members of Congress have also pushed back on the president’s plans.

Sens. Doug Jones, a Democrat from Alabama, and Lamar Alexander, a Republican from Tennessee, said Wednesday that they were working on a bill that would at least delay auto tariffs for some time. Both senators represent states with large auto-manufacturing bases.

“Nothing has done more during the last 40 years to raise family incomes in Tennessee than the arrival of the auto industry, and nothing could do more to damage those family incomes than the proposed tariffs on imported automobiles and automotive parts, combined with the tariffs on imported steel and aluminium that the administration has already imposed,” Alexander said during a speech on the Senate floor.

According to Politico, the bill would pause the Commerce Department’s auto-imports investigation until after the International Trade Commission conducts its own study. The senators say the measure would give Trump time to change his mind.

“I realise that folks affected by these proposed tariffs are looking for a silver bullet to stop them dead in their tracks,” Jones told Politico. “Right now, the only silver bullet in this case is for the president to change his mind.”

The bill also comes as more Republican lawmakers threaten to wrest control of trade policy back from the president. GOP Sens. Bob Corker and Pat Toomey developed a bill that would give Congress the ability to approve tariffs imposed on national-security grounds.

Sen. Orrin Hatch, the Republican chairman of the Senate Finance Committee, also warned Trump in a speech Tuesday that legislation may be necessary unless the president reverses course.

“If the administration continues forward with its misguided and reckless reliance on tariffs, I will work to advance trade legislation to curtail presidential trade authority,” Hatch said.

In the House of Representatives, meanwhile, a bipartisan group of 149 lawmakers sent a letter on Wednesday to Commerce Secretary Wilbur Ross urging against the tariffs.

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