If EU Tariffs and Barriers are not soon broken down and removed, Trump threatens to place a 20% Tariff on all of cars coming into the U.S. The U.S. currently charges a 2.5 % tariff for car imports vs. a 10% duty imposed by Europe. But the U.S. imposes a 25% tariff on imports of light trucks vs. Europe’s 10% for those vehicles.

The U.S. imported nearly 1.3 million vehicles last year from the European Union, representing about 7% of all light vehicles sold in the U.S. in 2017.

A 20% tariff would hit the German auto makers the hardest with BMW, Daimler and Volkswagen exporting a combined 726,300 vehicles to the U.S. last year.  Fiat Chrysler Autombiles NV would be exposed, with it exporting roughly 154,400 vehicles to the U.S. in 2017.

An increase in tariffs on European cars would be "terrible" for German manufacturers in particular. Trump's tariffs would cost German automakers more than $5.2 billion annually. Not a single car could be shipped with a profit to the U.S. from Germany.

If Trump follows through, German automakers would likely respond by selling fewer vehicles in the U.S. or increase prices sharply.

Of their U.S. sales, BMW imported 70.8 percent from Europe, Mercedes maker Daimler 51.9 percent and Volkswagen 45 percent. About 89.4 percent of Swedish brand Volvo's U.S. sales came from European plants in 2017. But that's poised to drop soon after Volvo opens its first U.S. plant  in South Carolina.

The Alliance of Automobile Manufacturers, a Washington-based lobby group that represents 77% of all car and light truck sales in the U.S.  opposes increased tariffs Tariffs raise vehicle prices for US customers, limit consumer choice and invite retaliatory action by  trading partners. Automakers support reducing trade barriers across the board and achieving fairness through facilitating rather than inhibiting trade.  

As of January , members of the Auto Alliance are:

  1. BMW Group
  2. Fiat Chrysler Automobiles
  3. Ford Motor Company
  4. General Motors
  5. Jaguar Land Rover
  6. Mazda
  7. Mercedes Benz USA
  8. Mitsubishi Motors
  9. Porsche
  10. Toyota
  11. Volkswagen Group of America
  12. Volvo Car USA

A new study says the American automobile industry will lose 195,000 jobs over the next three years if President Donald Trump presses forward with a plan to impose 20 percent tariffs on imported cars and auto parts. That's on top of the existing tariffs on steel and aluminum, which are already forecast to whack automakers and other manufacturing jobs. According to the study, which was released by the D.C.-based Peterson Institute for International Economics (PIIE), a 20 percent tariff on automobiles and auto parts would cause production in those industries to fall by about 1.5 percent and would force the industry to shed around 1.9 percent of its American workforce. The resulting slowdown would affect more than $200 billion in U.S. exports, PIIE projects.

Trump has ordered Commerce Secretary Wilbur Ross to investigate whether the U.S. should slap new tariffs on imported vehicles and auto parts under Section 232 of the Trade Expansion Act of 1962, which allows the president to impose tariffs unilaterally for "national security" reasons. It's the same process the White House used to craft the tariffs on steel and aluminum imports. It's absurd, of course, to argue that imported cars are a threat to national security. The auto tariffs "would deal a staggering blow to the very industry it purports to protect. The American automobile industry employs 50 percent more people than it did in 2011 and domestic production has doubled in the last decade. According to PIIE, the United States imported $183.8 billion of passenger cars, SUVs, and minivans in 2017, mostly from the European Union ($46.6 billion), Canada ($43.3 billion), and Japan ($43 billion).

If other countries respond to American tariffs on automobiles and auto parts with similar tariffs, PIIE projects, the consequences could be even more disasterous. In that scenario, American production would fall 4 percent and 624,000 American jobs would be lost.

Both scenarios demonstrate how reliant the domestic industries are on imported parts, or intermediate inputs, that are not produced in the United States or that have no easy US-made substitute.

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