Trump threatens 20 pct tariff on EU cars

David Shepardson
President Donald Trump has threatened the EU with a 20 per cent tariff on car imports into the US

US President Donald Trump has threatened to escalate a trade war with Europe by imposing a 20 per cent tariff on all US imports of European Union-assembled cars, a month after the administration launched an investigation into whether car imports pose a national security threat.

"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 US Build them here!" Trump wrote on Twitter on Friday.

Trump's tweet on cars came after EU reprisals against his tariffs on European steel and aluminium. The EU targeted more than $US3 billion ($A4.0 billion) in American goods exported to the 28-member European Union.

The US currently imposes a 2.5 per cent tariff on imported passenger cars from the EU and a 25 per cent tariff on imported pickup trucks. The EU imposes a 10 per cent tariff on imported US cars.

German car-makers Volkswagen, Daimler and BMW build vehicles at plants in the US. Industry data shows that German car-makers build more vehicles in southern US states that voted for Trump in the 2016 presidential election than they ship to the US from Germany.

The US Commerce Department is investigating whether imports of cars and car parts pose a risk to national security. 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.

Tariffs on car imports would add to an array of trade wars Trump has started, saying he aims to create US jobs and protect domestic industries.

Trump has threatened duties on up to $US450 billion of imports from China. Administration officials have said China should strengthen protections for US companies' intellectual property, and reduce tariffs on US products.

The move against China could raise prices for American consumers and businesses and hit global supply chains for industries like carmakers and electronics. Chinese reprisals have hit American farmers already.

Trump's trade policies have also escalated conflict with Canada and Mexico as he seeks to renegotiate the $US1.1 trillion North American Free Trade Agreement on terms more favourable to Washington.

The Alliance of Automobile Manufacturers, representing major US and European automakers, said "tariffs raise vehicle prices ... limit consumer choice and invite retaliatory action by our trading partners. Automakers support reducing trade barriers across the board and achieving fairness through facilitating rather than inhibiting trade."