13 May, 2019

Trump's EU tariff deadline could be extended

US President Donald Trump could delay the deadline for US tariffs on cars imported from the European Union.

The 18 May date set by the US is fast approaching but this may be too soon to implement according to Trade Commissioner Cecilia Malmström, especially following the country’s announcement of a rise in tariffs on Chinese imports.

‘There are signals that [the deadline] could be extended - because of the negotiations between the US and China. It would be ‘very easy to extend this deadline if Trump wants it, he just has to decide,’ Malmström told the Süddeutsche Zeitung newspaper.

Trump received a report on the national security implications posed by vehicle and parts imports into the US in February. The President will use the issue of national security to force through any such plans to bring in levies against products.

German risk

Carmakers and parts suppliers have been waiting in anticipation of the report's findings and expect that recommendation options will include import tariffs of 20-25% on assembled cars and parts, with earnings at German manufacturers Daimler, BMW and Volkswagen Group most at risk.

German Chancellor Angela Merkel defended the country’s car industry to an audience of senior security officials in Munich earlier this year, calling the Trump administration’s suggestion that European autos are a threat to US security a ‘shock.’

Malmstrom’s hopes of a delay to any tariffs also revolve around an agreement that Trump and EU Commission President Jean-Claude Juncker made in Washington in July 2018. ’As long as we are in negotiations, no new tariffs will be imposed, and we hope the US President will stick to them,’ said the Trade Commissioner.

However, should the US go ahead with its plans, the EU is prepared to retaliate. The Commission has prepared tariffs on a total of €20 billion in US goods, including ketchup and tractors, should Trump follow through on his threat.

US view

The US Commerce Secretary, Wilbur Ross, believes that the President will rule on the decision of imposing tariffs by 18 May, suggesting that cars share equal blame with China for the country’s trade deficit.

‘The reason autos are very important to our trade picture is about half of our trade deficit comes from the single product, automotive, and about the other half of our trade deficit comes from a geographic area and that’s called China,’ Ross said at a press conference in Luxembourg.

‘In order to reduce our trade deficit, one of the big objectives of this administration, we need to deal with China as an entity, and we need to deal with automotive as a product line,’ he said.

The news that Trump was imposing tariffs on $200 billion (€178 billion) of Chinese goods broke earlier this month. Levies rose from 10% to 25% on a range of products imported to the US, including around $2.3 billion (€2 billion) of vehicle parts.

The European Commission warned the US in January that imposing import tariffs on cars and vehicle parts would harm its own industry and lead to countermeasures by trading partners on $294 billion (€262 billion) of US exports.