Trump considering 25% tax on US car imports
Cars imported to the US could be slapped with raised import tariffsReports suggest overseas 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 the EU, with Germany’s car industry being a heavy source of income to the union.
Trump has been outspoken in his tirades against the car industry, first taking aim at domestic brands that import into the US from Mexico, then at European countries’ appetite for domestic car brands over US ones.
He 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 models.
In the US, Trump has launched an investigation into 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 a move to protect local producers.
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Currently, the US charges just 2.5% on car imports; this is lower than the EU’s 10% and China's 25%, although the latter will lower its tariff to 15% from 1 July. Trump had previously described China’s unusually high import tariff as “stupid trade” and threatened to raise tariffs on EU-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, the US 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 accounting 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 in 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 15.6m in the EU and European Free Trade Association countries.
A Mercedes spokesman has been approached for comment.
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