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Trump threatens to impose tariffs on European auto imports

Trump threatens to impose tariffs on European auto imports

US President Donald Trump threatened a 20 percent tariff on cars imported from the European Union unless the bloc removes import duties and other barriers to US goods, escalating a global trade war that the European Union has warned could endanger US$300 billion in commerce.

"It's really a tangle; it's not a simple question" of cars being made in one place and sold in another, Kasper Peters, communications manager of ACEA, the European Automobile Manufacturers Association, said Friday in an interview with VOA.

Trump has been banging the drum for "fair trade" with all of the trading partners of the US since early in his presidential campaign.

The European Union is set to slap tariffs on 3.4 billion dollars (£2.5 billion) in American products, from whiskey and motorcycles to peanuts and cranberries.

The United States now imposes a 2.5 per cent tariff on imported passenger cars from the European Union and a 25 per cent tariff on imported pickup trucks.

The US imported nearly 1.3 million vehicles from the European Union previous year with the three big Germany companies, BMW, Daimler and Volkswagen exporting 726,300 of these.

Trump's tariff rhetoric further undermines a United States vehicle market already in its second year of decline after record sales in 2016, said Cody Lusk, president of the American International Automobile Dealers Association.

Germany's Daimler (DDAIF) and Volkswagen (VLKAY) initially fell about 1% in Friday's stock market trading in reaction to Trump's tweet. Shares of United States automakers Ford Motor Co and General Motors Co shares fell immediately after Trump's tweet but rebounded and were trading higher.

The U.S. Commerce Department has a deadline of February 2019 to investigate whether imports of automobiles and auto parts pose a risk to U.S. national security.

Commerce Secretary Wilbur Ross, whose department is overseeing the investigation, told a Senate committee meeting this week that no decision had been made as yet as to whether to recommend tariffs, He indicated that the probe was expected to be completed by early August. It exported more than 70% of those cars to other countries.

Sometimes, the US will impose additional duties on foreign imports that it determines are being sold at unfairly low prices or are being supported by foreign government subsidies.

Cash cushion. Following Trump's warning, China's central bank injected Rmb200 billion ($31 billion) into domestic financial institutions on Tuesday.

"We don't want to fight (over trade) in public via Twitter". Pursuant to the Wall Street Journal, "Our businesses will lose customers, workers will lose jobs, and American consumers will lose family income through higher taxes and higher prices". Chinese reprisals have hit American farmers already.

Those protectionist measures "are likely to move the globe further away from an open, fair and rules-based trade system, with adverse effects for both the USA economy and for trading partners", the International Monetary Fund said in a report after concluding the Article IV consultation with US authorities, an annual check-up of economic policies between the International Monetary Fund and its member countries.

"The people of Germany are turning against their leadership as migration is rocking the already tenuous Berlin coalition, " Trump tweeted earlier this week. Trump wants United States farmers to export raw agricultural commodities to Nigeria. "Automakers support reducing trade barriers across the board and achieving fairness through facilitating rather than inhibiting trade". The US exported $10 billion worth of passenger vehicles to the European Union previous year.

Sales to the U.S. fell 10 percent to 494,000 vehicles, while Germany automakers produced 804,000 vehicles in the United States a year ago.

An economist, Michael Izunacho, told the Daily Trust on Sunday that as both countries increasingly impose new tariffs on their import commodities, exporters from the two countries will begin to think farther away from the affected countries.

Republican lawmakers and business groups have opposed higher auto tariffs.

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