Over the weekend, from the Munich Security Conference, we heard the speech by Angela Merkel and the rousing applause to it by all except Ivanka, where Merkel mockingly said ”We are proud of our cars and so we should be. If that is viewed as a security threat to the United States, then we are shocked."
That speech was triggered by the increasing alarm being felt by Europe, and Germany in particular, to trump’s threat to impose tariffs on U.S. car imports from Europe. On Sunday, Secretary of Commerce Wilbur Ross submitted to the White House the much-awaited results of “an investigation into the effect of imports of automobiles and automobile parts on the national security of the United States.”
The administration has 90 days to take action, and its looks increasingly likely that tariffs of 25% of car and parts imports from Europe will be imposed, if for no reason than spite and anger. Merkel’s mocking and the icy greeting for Pence in Europe probably didn’t help matters.
Here are some reactions and some additional info on the lunatic policy that will hurt everyone all around, include American manufacturers, farmers and consumers.
Some notes —
- A 25% tariff would add 10,000 euros to the sticker price of European vehicles imported into the country. That would especially affect German brands such as Volkswagen, Porsche and Mercedes-Benz. www.bloomberg.com/…
- The Center for Automotive Research last year estimated that new-vehicle prices could rise $455 to $6,875 depending on the tariff level or quota and other factors, lowering sales by nearly 500,000 to 2 million vehicles a year and wiping out as many as 750,000 jobs. www.autonews.com/...
- According to a study by the Peterson Institute for International Economics, a 25% tariffs on autos would result in the loss of 195,000 American jobs over a one-to-three-year period. www.businessinsider.com/…
- Cars made in the USA would not be spared; Toyota has warned that a Camry sedan assembled in Kentucky could jump in price by an average $1,600 if taxes of 25 percent were put on imported parts and components. news.yahoo.com/…
- The U.S. Motor and Equipment Manufacturers Association has stated that “these tariffs, if applied, could move the development and implementation of new automotive technologies offshore, leaving America behind. Not a single company in the domestic auto industry requested this investigation,” it said in a statement quoted by Reuters.
- Tariffs at 25% could halve German car exports to the US. That would reduce Germany’s overall car exports by 7.7 percent, worth around 18.4 billion euros. www.handelsblatt.com/…
- German carmakers account for about 7% of the US market (while US cars make up around 14% of the European market). But the Germans dominate in the premium sector, where they make up 40 percent of the market. www.handelsblatt.com/...
- In retaliation, the European Union is prepared to impose 20 billion euros ($22.7 billion) of U.S. goods with tariffs, including tariffs on soybeans, natural gas and perhaps cars made by American manufacturers. thehill.com/…
Some additional info -
- Over the last few years, the German auto industry has created 113,000 jobs in 300 US factories. And some 60 percent of those US-made German cars are exported, accounting for a quarter of all US auto exports. www.handelsblatt.com/…
- BMW’s manufacturing plant in Greer, South Carolina has the highest production volume of the BMW plants worldwide, currently producing about 1,900 vehicles per day.
- Car manufacturers have been hurting worldwide already due to falling sales in China, Europe and the U.S., and due to increased R&D spending on electric and self-driving cars. economictimes.indiatimes.com/...
- Canada and Mexico will be exempt from the new automobile duties because of “new NAFTA”.
- The U.S. currently levies a 2.5% tariff on European car and car-part imports and a 25% tariff on light trucks (the so called chicken tax instituted in 1964).
- Some trade organizations also blasted the Commerce Department for keeping the details of its “Section 232” national security report shrouded in secrecy. www.reuters.com/...
- Sen. Pat Toomey (R-PA) introduced a bill last month that would give Congress sixty days to approve any proposed tariffs under section 232. www.cnbc.com/...
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Sen. Robert Portman (R-OH) also has a proposal to address what he sees as the misuse of national security in trade fights. Under his proposal, the Pentagon would make the primary determination that a tariff is needed, not the Commerce Department. And Congress would have the right to disapprove of those measures. www.cnbc.com/...
In the final analysis, what exactly will these tariffs accomplish? Will they enrich some of trump’s businesses and his pals? Will it make Putin or Russian car-makers happy? Will it trigger the recession that seems to be waiting in the wings? Will the tariffs lead to higher consumer prices, which will act as an extra tax on the middle class? Is there a better way to improve the trade imbalance?
Will the GOP stand back and let trump and his minions destroy the world economy? Will GOP lawmakers who are grumbling do anything beyond grumbling? What can Democrats do? Will the donor class finally take notice that their lifestyles are under threat by this incompetent, petulant, wrecking-ball presidency? Stay tuned.