Cars imported to the US could be slapped with raised import tariffsReports suggest car makers could be charged as much as 25% import tax; European premium brands could be hit
US President Donald Trump has revealed to French President Emmanuel Macron that he wishes to raise levies on imported cars to 25%, and obliterate European luxury car sales in the US.
Wirtschaftswoche reports that the comments, made to Macron and reported to the media via several EU and US diplomats, could spark a trade war between the US and EU, with Germany’s car industry being a heavy source of income.
Trump has been outspoken in his tirades against the car industry, first taking aim at domestic brands who import into the US from Mexico, and then at European countries’ appetite for domestic brands’ cars versus the lack of appetite for the cars of US brands.
The outspoken US President has previously expressed his distain at German luxury brands, particularly Mercedes-Benz, and its prominence in New York’s Fifth Avenue. It’s reported that Trump said the tax would be upheld until Fifth Avenue was devoid of Mercedes-Benz models.
The US president has launched a probe to investigate whether vehicle and automotive parts imports are hindering the sector’s ability to compete globally. Under the US’s Trade Expansion Act of 1962, such a scenario could allow Trump to raise import tariffs to protect national interests.
This was the process undertaken last month when Trump raised tariffs for steel and aluminium imports. Tariffs for those materials now stand at 25% in order to protect local producers.
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Currently, the US charges just 2.5% on car imports, which is lower than the European Union’s 10% and China's 25% - although the latter country will lower its tariff to 15% from 1 July. Trump has previously described China’s unusually high import tariff as “stupid trade” and threatened to raise tariffs on European Union-imported cars.
Although a large portion of the US’s most popular car models, including those from foreign brands (such as the upcoming BMW X7), are already manufactured within its borders, many are imported from other countries. Most imports come from Asia, but several European brands, including Land Rover, don’t have US factories.
In fact, America is the largest export market for cars built in the EU. Last year, £171 billion worth of cars were exported from the EU, with the US the destination for 25% of them. Of those cars, just over half were exported by German car makers.
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Leaders in China and South Korea have already said they will monitor the situation closely and react accordingly to protect the interests of brands from their countries.
Although China is the world’s largest new car market, with 23.9 million vehicles sold there last year, the US remains a core focus for most global brands. In 2017, 17.2m vehicles were sold in the US, compared with 15.63m in the EU and European Free Trade Association countries.
A Mercedes-Benz spokesman has been approached for comment.
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via Autobuzz Today
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