Today, as Reuters news agency reported, the President of the United States Donald Trump threatened to escalate a trade war with Europe by imposing a 20 percent tariff on all U.S. imports of European Union-assembled cars.
"Based on the Tariffs and Trade Barriers long placed on the U.S. and it great companies and workers by the European Union, if these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the U.S. Build them here!" Trump tweeted.
The President's tweet caused a tectonic shift, cratering the European Auto Stocks Index, and causing shares of U.S. automakers Ford Motor Co and General Motors Co to rapidly fall, and then rebound, Reuters noted.
According to Reuters, the European Union currently imposes a 10 percent tariff on imported U.S. cars, while the U.S. currently imposes a 2.5 percent tariff on imported passenger cars, and a 25 percent tariff on pickup trucks imported from the EU.
Although Trump is known to flip-flop, he has always been a hardliner on trade. As the Washington Post noted, on trade, the President has been rock-solid consistent for four decades. His protectionist stance on automobiles, however, is already facing push-back from the European Union, albeit thus far only rhetorical.
The European Union issued an alarming warning today, following Trump's car tariff comments. The introduction of U.S. tariffs on European Union automobiles and car parts could affect $300 billion in trade, the new EU report, authored by the European Commission, and obtained by Bloomberg states.
According to the same report, Trump's car tariffs could lead to the loss of 180,000 U.S. jobs. All European Union member states would be affected, Germany in particular, since the country ships approximately 600,000 automobiles to the U.S. every year.
Trump's comments, Bloomberg noted, come days after the EU triggered tariffs on $3.3 billion of American products, in retaliation to U.S. duties on European steel and aluminum exports.
What can now be considered a glimpse into a full-blown trade war continues to escalate, and according to the European Union's estimates, the 20 percent tariff on European vehicles would cause giants such as Volkswagen AG, Daimler AG, BMW AG to take a monumental financial blow of $5.2 billion.
German Spiegel referred to Trump's protectionism and trade wars as a "hostile move," threatening to cause lasting damage to American and European economies.
"You don't listen, and you think you can talk down to the Europeans and belittle them. That's not going to happen. That's not how you treat allies, and Americans and Europeans are allies," the European Commission chief said, according to Spiegel.