President Donald Trump said Tuesday that the U.S. was close to finishing a study on EU auto imports, suggesting he may be nearing a decision to follow-through on an earlier threat to impose fresh new tariffs on French and German carmakers.
In a series of Tweets early Tuesday that focused on the growing confusion surrounding the White House's trade policy, Trump took aim at both Harley Davidson (HOG) , which announced plans to move some of its production facilities outside of the United States in order to avoid paying steep new levies imposed by Brussels, and the broader European auto complex, which he said had "taken advantage" of the world's biggest economy for a long time.
....We are finishing our study of Tariffs on cars from the E.U. in that they have long taken advantage of the U.S. in the form of Trade Barriers and Tariffs. In the end it will all even out - and it won't take very long!— Donald J. Trump (@realDonaldTrump) June 26, 2018
Shares in Daimler AG (DMLRY) extended their recent decline following the latest Trump tweet, falling 0.39% to €55.80 each in mid-day trading in Frankfurt. Domestic rival BMW AG shares (BMWYY) were also under pressure, falling 1.22% to €77.80 each while Volkswagen AG (VLKAY) shares were marked 0.8% lower at €143.06 each. The Stoxx Europe 600 Automobiles and Parts index slid into negative territory for the session and is now trading at the lowest levels since early September.
Last week, Trump Tweeted that if Europe's tariffs aren't removed, he would apply the added levy to auto imports, although he did not specify how and when the charge may be put in place. His comments come on the same day that the EU imposed its own retaliatory tariffs on $3.4 billion worth of U.S. goods in response to the Trump administration's charge in non-American steel and aluminium.
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!— Donald J. Trump (@realDonaldTrump) June 23, 2018
Trump has consistently referenced the European auto sector as a potential target for tariffs in his effort to reduce what he has called "unfair" trade agreements between the United States and its largest economic partners.
The average EU tariff on U.S. goods imported into the bloc is 3%, according to Export.gov data, although non-EU automobiles are subject to a 29% tariff when brought into the bloc, of which 19% is a value-added tax and 10% is a tariff based on current World Trade Organization (WTO) rules.
Cars imported into the United States from countries that don't have existing pacts with Washington are subject to a 12.5% levy, while pickup trucks are subject to a 25% tariff.
That said, some of the largest production facilities of Europe's biggest carmarkers are located in the United States, with plants in Vance, Al. and Spartanburg, S.C. and Chattanooga, Tn., that assemble around a third of the German cars sold domestically.