German auto shares dip on Trump tariff tweet

Roman Schwartz
June 24, 2018

"The BMW Group has been a committed corporate citizen in the U.S. for more than a quarter-century", said the company when asked for a comment on Trump's latest threat.

Auto tariffs are shaping up as the next battle in what officials here fear is developing into a full-blown trade war between the US and its closest allies.

Trump posted his threat on Twitter the day European Union reprisals took effect against USA tariffs on European steel and aluminum.

Daniel Gros, director for Economy and Finance at the Centre for European Policy Studies, said that in a trade war everyone stands to lose, but the USA has put itself in a worse position.

Trump has also started a trade fight with China over Beijing's sharp-elbowed efforts to overtake US technological dominance.

"You're already going to see prices going up incrementally as a result of the steel and aluminum tariffs in the auto sector", said Lusk, whose group represents foreign-branded auto dealers in the U.S. Trump would start July 6 by taxing $34 billion worth of products and later add tariffs on an additional $16 billion in goods.

The Washington trade association for BMW, Daimler and Volkswagen's operations in the United States warned consumers will be harmed by higher tariffs.

The statement followed a Wall Street Journal report on Wednesday that U.S. Ambassador to Germany Richard Grenell was bringing a proposal to Washington from German automakers to eliminate auto tariffs across the Atlantic. Trump has erroneously called out India for its "100 percent" tariffs on Harleys; in fact India lowered its tariffs on high-end motorcycles from a range of 60-70 percent to 50 percent. They totally rely on us, which is fine with me.

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In May, the Trump administration also said that it would begin investigating whether the import of auto parts into the US constitutes a national security threat.

Two days of public comments have been scheduled in July, and Commerce Secretary Wilbur Ross said on Thursday the department aims to wrap up the probe by late July or August.

On the first day of this month, Donald Trump took unilateral action to protect the United States from the "national security threat" posed by cheap, European metal. Chinese reprisals have hit American farmers already.

Trump has threatened to levy a 25 percent tariff on goods coming in from China, where the Buick Envision, Volvo S60 Inscription and S90, and Cadillac CT6 plug-in hybrid are made. Potential tariffs between the European Union and Britain after Brexit and yet more tariffs between Europe and the United States will shrink the market further, auto executives fear.

The rising tensions and the chaos surrounding the steel and aluminum tariffs are starting to generate pushback on Capitol Hill.

Most of the cars imported to the United States from Europe are luxury models.

Sen. Orrin Hatch, who opposes the auto tariffs, did the math for Commerce Secretary Wilbur Ross at a hearing this month. In 2017, 17.2m vehicles were sold in the United States, compared with 15.6m in the EU and European Free Trade Association countries.

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