Trump Edges Closer to Tariff on Cars from EU

President Donald Trump says he is close to ordering tariffs on cars imported from the European Union in a bid to banish what he describes as the bloc’s unfair trade barriers.

Last week he threatened to impose a 20% import tax on European vehicles, complaining that the EU has “long taken advantage of the U.S.” Last year 71% of the 1.61 million European cars sold in the U.S. were imported, according to Autodata Corp.

Trump has repeatedly railed specifically about Germany’s automotive trade surplus with the U.S. He wants that country’s carmakers to build more vehicles in the U.S. He also criticizes the EU’s 10% tax on imported cars, which compares with existing U.S. tariffs of 2.5% on imported cars and 25% on imported pickup trucks.

The U.S. Dept. of Commerce is already determining whether foreign-made cars pose a threat to national security, a position the U.S. used to justify protective tariffs on aluminum and steel. The department’s investigation was triggered by an earlier White House threat to levy a 25% tax on all vehicles made anywhere outside the U.S. Results of that analysis are expected around the end of July.

The Alliance of Automobile Manufacturers, speaking on behalf of 20 U.S., European and Asian carmakers, opposes higher tariffs. It estimates that a 25% import tax would boost the price of foreign-made cars by an average $5,800 and represent a $45 billion annual tax burden on consumers, Reuters reports.