“The European Union was formed to ruin the United States,” Donald Trump said this week. “That's what it was about. They did a good job with it, but now I'm the president.”
A harsh sound? Take into consideration the numbers. The US currently imposes a 2.5% tariff on cars imported from Europe. Meanwhile, Europe imposes 10% import duties on cars imported from the US
The 25% tariff adds about $60 billion to the financial resources. But that also means that overall car prices could rise by $60 billion.
In other words, tariffs in Europe are four times higher. The US also has a 25% tariff on pickup trucks, but Europe is not actually making pickups.
Nevertheless, these words caused a regular pearl cluster from the usual subject. But most Americans are more focused on what Trump is trying to do about this. He is slapping on every car imported at 25% tariff.
Enlarge target
Trump has threatened to raise tariffs on cars from Canada and Mexico, but is still targeting imports from Europe, Japan and South Korea.
Additionally, these duties have a start date: April 2nd.
Volkswagen, Hyundai Kia, Mercedes, Nissan and BMW are the most affected, as they have the highest percentage of imported vehicles. all Automakers are working hard. Imports account for almost half of all vehicles sold in the US, most of which come from Mexico, Korea and Japan.
Data from global data shows that automobile manufacturers such as Volkswagen and Hyundaikia rely heavily on overseas production, with 80% and 65% of US sales coming from imports, respectively.
North American influence
The potential impact on vehicles manufactured under the US-Mexico-Canada agreement remains uncertain. The North American automotive industry is built on a deep, interconnected supply chain, and disruption can increase the costs of manufacturers and consumers. Tariffs on automobile imports can lead to rising prices, affect production timelines, and complicate long-standing trade relations between the three countries.
The US imports vehicles worth $240 billion each year. The 25% tariff adds about $60 billion to the financial resources. But that also means that overall car prices could rise by $60 billion.
And don't make any mistakes about it. Domestic manufacturers go up to match prices roughly.
Those tricky bats
However, you need to be careful here. Europe also imposes a VAT on all products sold in Europe, but not if those products are exported. It's a tax policy that is really designed to boost exports and hurt imports. Japan and South Korea also use VAT.
President Trump says he will understand how high tariffs should be on cars coming from those countries, including those bats. Germany has 19% VAT, 10% in Korea and 20% in Japan. Trump says that if other countries cut theirs and remove trade barriers, he will lower his tariffs. There's one thing that's certain. This story is not over.
Trump has also pledged tariffs on imported goods generally, including a 25% tariff on steel and aluminum, which will come into effect on March 12th. This rhetoric has reinforced the fear of escalating the global trade war and promoting US inflation.
The president did not provide details on the potential tariff range or rates, but the move is consistent with his broader trade strategy to encourage domestic production and restructure global trade relations.
