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Iowa Senator Says Trump is Inclined to Increase Tariffs on Imported Autos From the EU

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【Summary】U.S. President Donald Trump is likely to move ahead with tariffs on imported vehicles, according to a report by Reuters. The move could prompt the European Union to agree a new trade deal. The Trump administration has targeted luxury European imports from automakers such as Mercedes Benz, BMW and Audi.

FutureCar Staff    Jan 17, 2019 5:10 PM PT
Iowa Senator Says Trump is Inclined to Increase Tariffs on Imported Autos From the EU
(Photo: Mark Bramley)

WASHINGTON — U.S. President Donald Trump is likely to move ahead with tariffs on imported vehicles, according to a report by Reuters. The move could prompt the European Union to agree a new trade deal, said Senate Finance Committee Chairman and Iowa senator Charles Grassley on Wednesday.

"I think the president's inclined to do it," the Republican senator told reporters. "I think Europe (is) very very concerned about those tariffs, It may be the instrument that gets Europe to negotiate."

Recommendations by the U.S. Commerce Department into whether Trump should impose tariffs of up to 25 percent on imported cars on the grounds of national security grounds are due next month.

Trump has targeted luxury European imports from automakers such as Mercedes Benz, BMW and Audi.

In April of last year, a report in German business news publication WirtschaftsWoche cites unnamed diplomatic sources who said that Trump told French president Emmanuel Macron in April that he would maintain his trade policy "until no Mercedes models rolled on Fifth Avenue in New York."

According to Reuters, Grassley, a Republican, has had regular talks with Trump and U.S. Trade Representative Robert Lighthizer on trade issues, said he personally does not like new tariffs but "they are a fact of life when Trump is in the White House." He said they may have been an "effective tool" in getting China, Canada, Mexico and others to negotiate on trade.

The White House has pledged not to move forward with imposing tariffs on the European Union or Japan (the home of Toyota), as long as it is making steady progress on bilateral trade talks.

Trump has urged the EU to drop its 10 percent tariff on imported vehicles. The U.S. passenger car tariffs on European imports is set at 2.5 percent, while the U.S. imposes 25 percent tariffs on European built pickup trucks.

Trump has repeatedly threatened to impose new auto tariffs. "Cars is the big one," Trump said last year.

The prospect of 25 percent tariffs sent shockwaves through the auto industry, with U.S. and foreign automakers lobbying against it. The Alliance of Automobile Manufacturers, whose members include General Motors, VW and Toyota Motor Corp, warned that tariffs would boost imported car prices by $5,800.

Automakers say imposing 25 percent tariffs would raise cumulative prices for U.S. vehicles by $83 billion annually and cost hundreds of thousands of jobs. They argue there is no evidence auto imports pose a national security risk. German automakers Volkswagen AG and BMW met with Trump in December to urge him not to impose tariffs.

Eliminating tariffs on U.S. auto imports would do little to help General Motors and Ford, but could be a big boost for Germany's BMW AG and Daimler AG. SUVs assembled by the two automakers in plants in South Carolina and Alabama make up the bulk of models exported to Europe from the U.S.

On Monday, Volkswagen AG said it would invest $800 million in its Chattanooga, Tennessee operations and add 1,000 jobs to build electric vehicles, a move Trump praised.

Earlier this week, Senators Doug Jones and Lamar Alexander re-introduced legislation to delay any 25 percent auto tariff and require the International Trade Commission to conduct a comprehensive study before tariffs could be applied.

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