June 25, 2018
Trump's car tariff to come early
One of the main purpose of newspapers these days is to summarise what you can read on Twitter. The most important tweet of the last few days, and one of the most important news stories, was the de-facto announcement of car tariffs by Donald Trump:
"Based on the Tariffs and Trade Barriers long placed on the U.S. & its 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!"
Politico tells us that the Commerce Department has scheduled two days of public comments in July in its investigation of the national security implications of imported cars and car parts. Wilbur Ross, the commerce secretary, said he wanted to wrap up the whole investigation by late July or August. This would suggest that the tariffs could be imposed as early as August. The paper quotes a research note by Evercore ISI, which said that a 25% import tariffs
"would pretty much destroy the business of importing cars from Europe/China".
There is a confusion between the 25% - threatened earlier by Trump - and the 20% mentioned in the tweet. We have no intelligence on whether Trump is wildly punching some numbers into his keyboard, or whether the new lower number is indeed what they are now targeting. Wolfgang Munchau makes the point that the reality of US car tariffs could have a profound impact on the Brexit discussions. The UK is the largest export market for German car makers, followed by the US. If the US imposed tariffs, and if the Brexit talks were to collapse, the German auto industry would have to face crippling tariffs in three of its four largest export markets. The third one is China which is due to to slap car tariffs on US-made cars, many of them by German companies, in retaliation for the tariffs imposed by the US on Chinese goods. The EU clearly has no interest in a hard Brexit in this situation.