Auto Prices Could Be on the Upswing Again as Trump Signals More Tariffs
A new month is bringing a new round of tariff threats by U.S. President Donald Trump. Read on for information about the latest countries to be slapped with tariffs, as well as what types of products may be impacted.
Trump Threatens More Tariffs on Automobile Imports from Europe
President Trump is threatening to increase tariffs on cars and trucks imported from the European Union (EU). Trump made the announcement on Friday, May 1, via a post on social media. The president said that the 25% tariff will be imposed because "the European Union is not complying with our fully agreed to trade deal." Trump confirmed that the tariffs will be levied on "cars and trucks coming into the United States."
The social media post did not indicate which law the Trump administration will lean on to impose the tariffs. This could prove to be a roadblock for the White House, as the U.S. Supreme Court previously overturned Trump's emergency tariffs on imports from other nations back in February. However, the president is not letting this ruling from the highest court in the land deter him, saying that he can impose fees under the limitations of other statutes. Legal experts note that these statutes are generally enacted after an investigation into unfair trade practices and not by the president himself.
Not surprisingly, the EU is not reacting favorably to the news of more tariffs. Bernd Lange, head of the EU parliament's trade committee, said that Trump's announcement is further proof that the U.S. is an unreliable trade partner. Lange said, "This latest move demonstrates just how unreliable the U.S. side is. This is no way to treat close partners. Now we can only respond with the utmost clarity and firmness, drawing on the strength of our position."
The European Commission said that it will continue to keep its options open in an effort to protect interests in the EU. The commission vowed that the EU was adhering to its commitments; however, it was seeking clarity from the White House about what was expected.
Trump is going after a vulnerable target in the EU. Automobile manufacturing is a significant contributor to the overall economy in Europe.
The president is defending the decision to impose more tariffs, saying that the goal is to encourage more automobile companies to move their factories to U.S. soil. When speaking to reporters on Friday before leaving the White House for Florida, the president said, "We raised the tariffs because, as usual, they were not adhering to the agreement we have." Although he did not detail the alleged violations of the agreement, Trump said that raising the tariffs "forces them to move their factory production much faster."
According to Trump, Japan, South Korea, and other nations are moving $100 billion worth of automobile factories to the U.S. because of his tariffs.
History of the Tariffs Imposed on the EU
The latest tariff threat comes less than a year after a historic deal brokered between the EU and the U.S. at Trump's Turnberry golf course in Scotland. This meeting resulted in tariffs of about 15% on most products coming out of Europe after discussions between the American president and European Commission President Ursula von der Leyen.
The deal was seemingly positive for European interests, as Trump had previously threatened to impose levies of 30% as part of his extensive "Liberation Day" program. In exchange, European nations agreed to invest more money in the U.S. while also making a series of changes intended to increase U.S. exports. For instance, the initial agreement encompassed $600 billion in EU investments, as well as a commitment by the EU to purchase $750 billion in U.S. energy.
Relations between the U.S. and Europe seemed to be headed in the right direction following the trade meetings in Scotland. However, tensions began to escalate in the coming months after Trump threatened to annex Greenland, a Danish territory. By January, the European Parliament decided to suspend the approval of the earlier proposed trade deal.
While the deal was eventually approved in March, the addition of a clause allowed it to be suspended once again should the European Parliament deem that the Trump administration "undermined the objectives of the deal, discriminated against EU economic operators, threatened member states' territorial integrity, foreign and defence policies, or engaged in economic coercion".
The discussions have stalled again since the March vote, primarily over disagreements over steel and aluminum. In addition, some of Europe's most influential economies, including Germany and France, rejected U.S. proposals to adjust tariffs on a variety of products.
Only time will tell how the latest tariff tiff between the U.S. and Europe will unfold.
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