US car-tariffs threat "very difficult to understand" - EU

US car-tariffs threat "very difficult to understand" - EU

The Vice-President of the European Commission, Jyrki Katainen, said on Thursday that possible tariffs on vehicles from the European Union (EU) being considered by Donald Trump were “very difficult to understand”. If the United States unilaterally increased customs duties on vehicles, that would be contrary to World Trade Organization (WTO) rules, said Katainen.  "It is very difficult to imagine that [car imports] create the least threat to national security” he added. “It is very difficult to understand.”

US Commerce Secretary Wilbur Ross said on Wednesday that he had launched an investigation into vehicle imports, including trucks and spare parts, to determine their impact on US national security, which could be legal grounds for customs tariffs.

These taxes could amount to 25% on imported cars, according to the Wall Street Journal.

This new US customs threat comes as tax exemptions that EU steel and aluminum enjoyed in the US since March are about to expire.

"We feel that nothing justifies the United States imposing customs duties on steel and aluminum for national security reasons; invoking national security would be even more ridiculous in the case of the auto industry,” a Commission spokesperson said, adding that discussions were under way with the United States on the customs duties.

The Europeans said last week that they were ready to start discussions with Washington to reduce customs barriers in industry, including vehicles, but on condition that they would be definitely exempted from the taxes on steel and aluminum.

However, divergences have cropped up in the past few days, mainly between Germany, for which the auto industry is particularly sensitive and which favours dialogue at all cost, and France, which seems more reticent about the idea of a free-trade agreement, even a minimal one, with the United States.

The EU taxes cars imported from the United States and other non-EU countries at 10%, while the U.S. customs duty on European cars is just 2.5%. However, the United States slaps a 25% tax on trucks and pick-ups, whereas Europe taxes such imports at an average of 14%.

The Brussels Times

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