Donald Trump Threatens to Apply A Retaliatory Tax on EU Cars

President Donald Trump has threatened to “apply a tax” on imports of cars from the European Union.

He said other countries had taken advantage of the US for years because of its “very stupid” trade deals.

The trade wrangle began on March 1 when President Trump vowed to impose hefty tariffs on steel and aluminum imports.

That brought a stiff response from trading partners and criticism from the IMF and WTO.

EU trade chiefs have reportedly been considering slapping 25% tariffs on around $3.5 billion of imports from the US, following President Trump’s proposal of a 25% tariff on imported steel and 10% on aluminum.

According to European Commission head Jean-Claude Juncker, they would target iconic US exports including Levi’s jeans, Harley-Davidson motorbikes and Bourbon whisky.

In a tweet on March 3, President said: “If the EU wants to further increase their already massive tariffs and barriers on US companies doing business there, we will simply apply a Tax on their Cars which freely pour into the US.

“They make it impossible for our cars (and more) to sell there. Big trade imbalance!”

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A second tweet decried the “$800 Billion Dollar Yearly Trade Deficit because of our ‘very stupid’ trade deals and policies”.

The president added: “Our jobs and wealth are being given to other countries that have taken advantage of us for years. They laugh at what fools our leaders have been. No more!”

The US is the largest export market for EU cars – making up 25% of the €192 billion ($237 billion) worth of motor vehicles the bloc exported in 2016.

In the same year, China was second largest market with 16%.

Germany is responsible for just over half of the EU’s car exports, so new US tariffs would hurt the car industry there. However, German auto makers also build hundreds of thousands of cars in the US every year – providing many US jobs that German officials say President Trump overlooks.

A number of Republicans have questioned the wisdom of the tariff proposal and have been urging President Trump to reconsider.

Senator Orrin Hatch said: “I’m very surprised, he’s had very bad advice from somebody down there. The people who are going to have to pay these tariffs are going to be the American citizens.”

Senator Ben Sasse also said: “Kooky 18th Century protectionism will jack up prices on American families – and will prompt retaliation.”

The US Motor and Equipment Manufacturers Association have expressed deep concern, saying the benefits from the recent cuts in corporation tax “could all be for naught”.

However, Commerce Secretary Wilbur Ross stood firmly behind the plans, saying the president was “fed up with the continued over-capacity, he’s fed up with the subsidization of exports to us”.

The new tariffs chime with President Trump’s “America First” policy and the narrative that the US is getting a raw deal in its trade relations with other countries.

On March 2, President Trump tweeted that the US was “losing billions of dollars” and would find a trade war “easy to win”.

He is using a clause in international trade rules which allows for tariffs for national security reasons.

President Trump had already announced tariffs on solar panels and washing machines in January.