- President Trump is increasing the tariff on European auto imports.
- The rate is set to climb from 15% to 25% starting next week.
- Trump claimed hike was due to EU not complying with trade deal.
President Trump has announced his intention to hit vehicles imported from the European Union with a 25% tariff next week. He said the move is in response to them “not complying with our fully agreed to trade deal.”
Trump didn’t explain what he meant by that, but encouraged European automakers to build vehicles in the United States to avoid tariffs. Many of them already do as BMW, Mercedes, Volvo, and Volkswagen have large plants in America. The Volkswagen Group is also building a new facility in Blythewood, South Carolina to produce the Scout Terra truck and Traveler SUV.
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It remains unclear if the president will follow through with his threat, but Reuters reported the tariff would increase 10% from the existing rate of 15%. The publication also quoted Trump as saying the move will bring billions of dollars into the United States and force European automakers to “move their factory production much faster.”
That’s a bit of a stretch as increased costs will be passed onto consumers and building an all-new factory takes years. That being said, firms with existing facilities can more quickly respond to changes. We’ve already seen this play out as Volvo is adding the XC60 to their Ridgeville, South Carolina plant later this year, while Mercedes will begin building the GLC at their Tuscaloosa facility.
The move appears to be designed to punish Europe for a variety of ‘offenses’ as Trump has raged at the European Union and its members for not supporting the war in Iran. The bloc has also been slow to implement the unpopular trade deal with the United States and Reuters reported that it’s not expected to be completed until at least June.
The threat has angered European officials, who called the move “unacceptable” and suggested it showed the United States was “unreliable.” Others have gone further and said it’s time for the EU to show “some backbone and stand up to Trump” with retaliatory tariffs as well as taxes on American tech giants.
