Trump threatens to escalate trade war with Europe

Lucy Bush
June 24, 2018

President Donald Trump escalated his trade dispute with China and is planning for $200 billion worth of Chinese goods to be subjected to an additional 10% tariff.

It also threatened to add a further $16bn later, targeting USA energy exports such as coal and crude oil and on June 18, 2018, President Trump ordered his administration officials to draft plans for tariffs on a further $200 billion in Chinese imports if Beijing does not abandon its intention to retaliate against United States duties on imports announced last week. "The woes the administration is inflicting on Chinese companies do not simply translate into boons for USA enterprises and the US economy".

The trade dispute escalated this week after President Donald Trump on Monday said he has asked the US trade representative to identify an additional $200 billion worth of Chinese goods for an additional 10 percent in tariffs. However, oil prices retreated from the multi-month peaks later and are now consolidating with looming worries over the possibility of China imposing tariffs on U.S. crude oil as well as the outcome of OPEC bi-annual meeting.

The group, whose members include European automakers BMW, Volkswagen, Jaguar-Land Rover, Mercedes-Benz, Porsche and Volvo, says automakers favor reducing trade barriers and "achieving fairness through facilitating rather than inhibiting trade".

Trump imposed tariffs of 25 percent on European Union steel and 10 percent on aluminum on June 1.

Mr Juncker, who has previously criticised the move, said on Thursday: "It goes against all logic and history".

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This morning, Trump tweeted that "if [EU trade tariffs] 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!"

Concerns over trade war between the world's leading economies have resulted in wide swings in the global financial and commodity market.

Trump has always been fixated on imported cars.

When he announced the investigation back in May, Ross placed heavy emphasis on national security, saying that for "decades" there was "evidence suggesting that imports from overseas have eroded our domestic auto industry".

Canada said its tariffs of up to 25% on almost $13 billion of American products will take effect on July 1. The EU's new tariffs went into effect on Friday.

Trump's trade policies have also escalated conflict with Canada and Mexico as he seeks to renegotiate the $1.1 trillion North American Free Trade Agreement.

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In Germany, BMW's shares were down around two percent while Daimler and Volkswagen both dropped by more than one percent.

Brussels drew up the list of products in March when Trump first floated the idea of 25% tariffs on steel and 10% on aluminium. Leaders from American and European auto manufacturers have previously said such measures would lead to net job losses in the US.

Analysts at the Oxford Economics consultancy said the consequences for the European economy could be contained in the short term, as the affected imports only account for about 1% of all goods coming into the EU from the U.S., although it warned tariffs on cars would have a greater negative impact. A number of countries, including several in Europe, have shown a willingness to negotiate, but many have so far rebuffed Trump's take-it-or-leave-it demands.

It is hard for the White House to unilaterally impose tariffs without input from Congress, but Trump has found several ways to do it this year. By contrast, past year tariffs accounted for only about 1 percent of federal revenue.

Of their US sales, BMW imported 70.8 percent from Europe, Mercedes maker Daimler 51.9 percent and Volkswagen 45 percent, according to LMC.

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