US import tax on European cars one step closer
The threat of a US import tax of 25% or more on European cars is one step closer to self-fulfilling. A study by the Ministry of Commerce has concluded those cars ‘are a national security threat’ to the United States. Just what president Trump needs to get rid of the Mercedes-Benzes at his doorstep.
The latter was confirmed by several sources to the French news agency AFP. The President had commissioned the Ministry to conduct a study on the issue of ‘national security’. The same way he had done to justify import taxes on aluminum and steel in June 2018 for his allies in Europe and Canada.
90 days to decide
Neither of the sources has said a word on the recommendations from the Ministry to the President. Trump will get the report before the ultimate date on Sunday evening. Then Trump has 90 days to take a decision. It’s possible the content of the report won’t be made public after all.
Imposing import taxes on his allies was called ‘ridiculous’ and ‘absurd’ earlier by French president Macron and Canadian premier Justin Trudeau. In July 2018 EU Commission president Jean-Claude Junker twisted Trump’s arm at his visit to the US not to impose taxes as long as negotiations are going on.
Anyway, if Trump decides to push through, Europe has a list of countermeasures ready to levy taxes on 20 billion euro of American goods.
Import taxes would hurt especially the German car makers. They export some 470.000 cars to the US yearly. They also have large car factories in the US. BMW has its largest car plant in South Carolina. In 2017 70% of the 371.316 cars produced there went abroad. BMW produces most of its SUVs for the world market there.
BMW: no security issue
In July 2018 BMW has listed its arguments against the Trump measures in a letter addressed to Wilbur Ross, Trade Secretary of State. “Taxes won’t better American competitiveness nor increase growth”, said Lisa Errion Saums, Vice-President responsible for governmental affairs for BMW in the US.
Replying to the argument of ‘national security’ used by the Trump administration she added that she can in no way see how importing luxury cars (or manufacturing them in the US and exporting them) can be a threat to the security of the United States. “There is no direct correlation between local car production and national security”, she declared.
Jeopardizing jobs in US
Within the framework of the study by the US Ministry of Commerce asked the principal American players and the major ones affected abroad to give their written comments. The majority of them said opposing higher taxes.
A spokesman of the EU Commission stipulated earlier that European manufacturers have produced 2,9 million cars in the US last year, 26% of total car production. “Those companies give work to 120.000 people, directly and indirectly”. A new trade war could jeopardize employment here directly.
Taxes lead to smaller GM
GM’s CEO, Mary Barra, who normally stays far away from political issues stated that “higher import taxes can lead to a smaller GM, with rather less than more American jobs”. Barra, and a whole range of American CEOs, are clearly not happy with the commercial war Trump is planning.
Lately she shocked the political world (Trump and Trudeau especially) with her decision to close 7 GM plants in Northern America and license some 15.000 people.