Washington (AFP) – World powers on Thursday blasted US President Donald Trump’s steep tariffs on imported vehicles and parts, urging retaliation as trade tensions intensify and price hikes appear on the horizon. Major car exporter Germany called for a firm response from the European Union, while Japan said it “will consider all options.” Canadian Prime Minister Mark Carney said Thursday that the “old relationship” of deep economic, security and military ties with Washington “is over,” adding that he expected to speak with Trump in the next day or two.
The 25 percent US duties, which take effect on April 3 at 12:01 am (0401 GMT), impact foreign-made cars, light trucks and vehicle parts. Experts warn of higher vehicle costs, and Italian carmaker Ferrari said it would raise prices on many models sold to the United States by up to 10 percent from next week. Global stock markets slumped, with shares in automakers like Toyota, Hyundai, Mercedes, and others falling. Wall Street’s main indexes closed lower as shares in General Motors and Ford fell. French Finance Minister Eric Lombard said the only solution for the European Union is to “raise tariffs on American products in response.” Carney, who earlier called the tariffs a “direct attack” on his country’s workers, said he convened a meeting to discuss trade options.
Trump stepped up threats overnight, saying on social media that Canada and the EU could face “far larger” surcharges if they worked together “to do economic harm to the USA.”
– Price surge –
JPMorgan analysts estimate the tariffs on vehicles and parts over time could cause an increase of around $4,000 to $5,300 in average auto prices. It said around 82 percent of Ford’s US sales are produced domestically, with the corresponding figures for Stellantis at 71 percent and General Motors at 53 percent. The American Automotive Policy Council, representing the big three automakers, warned tariffs must be implemented in a way that “avoids raising prices for consumers” and preserves the industry’s competitiveness. Canadian Vehicle Manufacturers’ Association president Brian Kingston said the measures would bring higher costs for producers and consumers, alongside “a less competitive industry.”
While Trump invoked emergency economic powers for some earlier tariffs, his auto levies build on a government investigation completed in 2019.
– ‘Cheaters’ –
About one in two cars sold in the United States are manufactured in the country. Among imports, about half come from Mexico and Canada, with Japan, South Korea, and Germany also major suppliers. The White House estimates that of the US-made cars, their average domestic content is likely around 40 percent. Top Trump trade aide Peter Navarro on Wednesday blasted “foreign trade cheaters” who he said turned the US manufacturing sector into a “lower wage assembly operation for foreign parts.” He took aim at Germany and Japan for reserving construction of higher-value parts to their countries.
Since returning to the presidency, Trump has imposed tariffs on imports from major trading partners Canada, Mexico, and China — alongside a 25 percent duty on steel and aluminum. The latest levies add to those already in place for autos. But the White House said vehicles entering the United States under the US-Mexico-Canada Agreement (USMCA) can qualify for a lower rate depending on their American content. USMCA-compliant auto parts will remain tariff-free as officials establish a process to target their non-US content. Mexican President Claudia Sheinbaum said tariffs were contrary to the North American trade deal, but noted her country would wait until April before responding.
– ‘Bargaining chip’ –
Uncertainty over Trump’s trade plans have roiled financial markets, while consumer confidence slips. Trump has defended tariffs as a way to raise government revenue and revitalize US industry. Targeting imported cars, however, would have “a devastating impact” on many close US trading partners, said Asia Society Policy Institute vice president Wendy Cutler. Abby Samp of Oxford Economics said she expects “additional investments in US plants could be used as a bargaining chip to lower tariffs.” Besides automobiles, Trump is considering other sector-specific tariffs, including on pharmaceuticals, semiconductors, and lumber. He has promised “Liberation Day” on April 2, when he is set to unveil reciprocal levies tailored to different trading partners to address practices deemed unfair.
© 2024 AFP
