Trump Plans 25% Tariff On Up To $200BN In Foreign Cars As Advisors Helpless To Stop Him

With Trump's meeting with Jean-Claud Juncker set to begin any minute where the discussion of potential tariffs on European cars will be among the most heated topics, WaPo reports that "several" of President Trump’s senior economic advisers believe he plans to impose a 25 percent tariff on close to $200 billion in foreign-made automobiles later this year, three people briefed on discussions said.

Trump has said imposing tariffs on foreign cars could push Americans to buy more U.S. automobiles, helping U.S. workers. But critics believe tariffs would drive up the cost of all cars and pass those inflated prices on to consumers.

Putting the $200BN number in context, the US imported a record $192BN in new passenger vehicles in 2017, in other words Trump plans to tax all foreign auto imports.

Of course, it is common knowledge by now that the E.U. charges a 10% tariff on imports of U.S. automobiles, while the US has a far lower 2.5% tariff on European cars, however it charges a 25% tariff on light truck and sport-utility vehicle imports from other countries.

As the WaPo explains Trump wants to move forward despite numerous warnings from GOP leaders and business executives who have argued that such a move could damage the economy and lead to political mutiny.

However, as his increasingly belligerent tweets demonstrates, which compare tariffs to Muhammad Ali, Trump has become increasingly defiant in his trade strategy, following his own instincts and intuition and ignoring advice from his inner circle. As a result, he has told advisers and Republicans to simply trust his business acumen, a point he tried to reinforce Wednesday morning in a Twitter post.

“Every time I see a weak politician asking to stop Trade talks or the use of Tariffs to counter unfair Tariffs, I wonder, what can they be thinking?” Trump wrote Wednesday. “Are we just going to continue and let our farmers and country get ripped off?”

Meanwhile, ahead of Juncker's visit, Trump said that Juncker has come to negotiate with him over trade matters, "suggesting that his hard-line stance had forced other leaders to offer concessions."

Or maybe not, because so far there is little evidence that this trade approach is working

The disunity within the White House and Trump’s insistence on pushing ahead on auto tariffs was described by three people briefed on the status of negotiations who spoke on condition of anonymity because they were not authorized to reveal internal deliberations.

As the WaPo also notes, Juncker is expected to propose two ideas to try and calm tensions with the White House, a European official briefed on the plan said who spoke on condition of anonymity to describe the E.U. position.

One option would be lower tariffs among all major auto-exporting countries, while another would be a targeted deal between the United States and the E.U. to eliminate tariffs on industrial products, including cars.

Trump suggested a similar idea on Twitter Tuesday evening, but he seemed to suggest the Europeans would never accept the proposal he desired, making it appear an agreement was still out of reach.

Meanwhile, following today's woeful results from GM and Ford, as the top automakers cut guidance citing rising commodity prices as a result of yet more tariffs, the S&P Auto Industry Index tumbled to the lowest level since May 2017.

European auto stocks are worst...

And specifically, GM and Fiat Chrysler are getting hammered...

Comments

HockeyFool tmosley Wed, 07/25/2018 - 11:11 Permalink

Trump wants FREE trade, Euro weenies don't:

“The European Union is coming to Washington tomorrow to negotiate a deal on Trade. I have an idea for them. Both the US and the EU drop all Tariffs, Barriers and Subsidies! That would finally be called Free Market and Fair Trade! Hope they do it, we are ready - but they won’t!”

Fuck the EU. Fuck the Eurotrash.

In reply to by tmosley

NoDebt jin187 Wed, 07/25/2018 - 11:23 Permalink

If it's good enough to...

1.  Have them make their stuff here instead of shipping it in

or

2.  Drop their tariff barriers down to our levels

...then I'm OK with it.

I'm sick and tired of watching the US lay down for every other country who won't show us the same courtesy.  Not sure if you noticed, but we ALREADY LOST THE TRADE WAR.  This is the comeback.  And the shock and surprise on our trading partners' faces tells me Trump is taking the right path here.  

In reply to by jin187

Joe Trader brushhog Wed, 07/25/2018 - 11:49 Permalink

WHAT'S THE BIG DEAL? I thought the global government - U.N. - wanted us all to bike everywhere and live in apartments? (Agenda 21 - very real)

when bike lanes are being pushed on large north american cities AND small towns in eastern Europe - you officially know that our governments no longer provide local political representation.

In reply to by brushhog

bobcatz Joe Trader Wed, 07/25/2018 - 11:55 Permalink

let me get this straight...

trump messed up trade with tariffs

and now taxpayers have to pay for it to help US farmers?

jeez...

that's what happens when you get a potus

who only listens to and prefers anti-christ jews

like kushner, mnuchin, kudlow, and satanyahoo

they can't help but give bad advice

In reply to by Joe Trader

Klassenfeind Four Stop Wed, 07/25/2018 - 13:12 Permalink

The solution is very simple and 100% capitalistic: make better American brand cars that the consumer actually wants, that way you don't need to import high quality and fuel efficient foreign cars!

But no, Americans want shitty cars that are built in fucking tents, and Americans want to protect big gas guzzling 'trucks' where the bumper falls off after 1 year and the rattles and squeaks drive you nuts, so then the Orange Jew and his redneck friends will cry their crocodile tears that "boohoooo, the rest of the world is treating us soooooo unfaaaaaair." 😭

Americans want good old socialist protectionism because their car industry can't hack it in the real world! Hardly anybody in the rest of the world, except for a small niche group of US car enthusiasts, wants American gas guzzling pieces of shit!

In reply to by Four Stop

Klassenfeind tmosley Wed, 07/25/2018 - 13:37 Permalink

Dude, nobody wants American cars, except for a handful of car enthusiasts. Americans simply don't make products that the rest of the world wants. Tariffs or no tariffs, it's capitalism 1-0-1: if there is a strong demand for something, people will pay the price, including a silly 10% tariff!

Two of my mates here in Germany have American cars. One bought a brand new Ford F150 a couple of years ago, converted it to LPG in order to even remotely afford the running costs, and the other guy has an older Corvette.

Both cars rattle, squeak and guzzle like mad, but to my mates it's all music to their ears! Good on them! Personally, I also love the sound of an American V8 engine, and with me lots of Europeans do, but it's simply too expensive! Remember 2008 when oil was at $160 a barrel and all Americans were feeling the pinch? Well, this has been the case in Europe for many many DECADES already! Fuel taxes are sky high, and I would even argue that it's the fuel taxes that prevent American cars from entering the European market, and not so much that lousy 10% tariff.

I like all kinds of cars, but both mates independently from each other admit that it's just a hobby and that running costs (fuel and maintenance) + quality issues, and not so much the initial purchase price (10% tariff), are the big issues.

Both my friends also have a 'normal' car (one drives an Opel, the other an IMPORTED!!! Hyundai) which they use for everyday work commutes and grocery runs.

p.s. parking a Ford F150 in the average European or Asian parking spots is almost impossible, so again, the tariffs are not the issue. Even if you gave people a 10% discount they still would be reluctant to buy something American, simply because aside from the aforementioned issues (poor quality, lack of fuel efficiency) it's incredibly difficult in everyday use.

p.p.s. I have no idea how much the tariffs on an imported Hyundai are in Germany, but the fact that you see them EVERYWHERE in Germany (and Europe!) again illustrates that tariffs are not so much the problem if you make a good product that people want!

In reply to by tmosley

Joe Trader Klassenfeind Wed, 07/25/2018 - 17:19 Permalink

http://www.thecarexpert.co.uk/most-reliable-engines/

It depends.

Mercedes made the top 10 (best) - while BMW, Audi made the bottom 10 for engine failures.

Likewise Ford made the top 10, Vauxhaull made the bottom 10.

Honda's in another universe: 1 in 344 engines fail.

Each auto maker has its strengths, German cars have great interiors, Americans put an emphasis on their safety features. It's also not fair to compare the wants of the European market vs. American market. Europe doesn't have a lot of land hence tight urban roads, in many ways North America isn't as settled as Europe is thus the ability to plan cities around large cars.

In reply to by Klassenfeind

Nitefawkes Klassenfeind Wed, 07/25/2018 - 13:57 Permalink

Tell that to the largest buyer of GM vehicles globally China.  I used to own a Volkswagen until that piece of shit blew a 2nd transmission with less than 30K miles and they lied, schemed, and deceived their way to glory with their shitty diesels.  Let em fester and die in a cornfield.  My last GM truck ran 500k miles as a work truck.  My GM van 350K  All Gas motors.

In reply to by Klassenfeind

EddieLomax Klassenfeind Fri, 07/27/2018 - 04:30 Permalink

You make very good points, Europe today effectively has $160+ dollars a barrel oil, for example its around £6 a gallon in the UK ($8.5).

And the parking spaces are almost always too small too.  I loved driving my Jaguar XJ40, a huge car by European standards, but only as long as a normal estate (station wagon in US?).  There are several parking spaces in my town where it is impossible to park it in, with the greatest of irony Castle Bromwich in Birmingham where they manufacture Jaguars was a tight squeeze to park in!

I don't agree on quality though, as the American cars I've seen have been decent, but I've not looked at the fancy ones.  I suspect here that fancy American cars are like Aston Martins in the UK, very desirable and often a bit dodgy on build quality (a friend had to have his fuel tank emptied due to water leaking in, and some seals replaced etc).  The average A->B car is probably well built in the USA as it is in any other country today.

I can see cars like Tesla's and fuel efficient normal cars being snapped up in the UK/European market without a tariff, but outside of the small enthusiast market no one is going to be buying the bigger ones like pickups and monster SUV's.  (Normal SUV's or "Chelsea tractors" of the Range Rover size seem to be surprisingly popular here though).

Last point, in Germany almost everyone buys German, in France almost everyone buys French.  In other countries they are far more varied, so US cars will happily sell into the UK, Belgium etc markets fine.  If we end up with WTO tariffs UK<->EU and zero tariffs UK<->USA then the French, Italian, Polish and German car market in the UK will be taken over by the USA, the margins are just too tight on non-luxury cars to compete and the diminished market size for EU will make the top end brands much more expensive.

That's the real consequence of a "hard brexit" or no-deal brexit, Mrs May is an awful negotiator so will probably keep UK in EU, but anyone else can sell the EU's market share in the UK to the highest bidder.

Art of the deal.

In reply to by Klassenfeind

Ethelred the Unready Leakanthrophy Wed, 07/25/2018 - 14:13 Permalink

That VAT would likely apply to Euro made cars too.   So that's a level playing field.  Like our sales tax.  

I hope that we do not end up collecting those tariffs, but the funds can be used to offset other federal taxes (SS, Med-whatever) then I am good with it.  Self sufficiency is a public good as it help with national defense.  Russians are really big on self sufficiency as they know that one can never predict what will be the next horror sweeping in from the east or west. 

In reply to by Leakanthrophy

EddieLomax Leakanthrophy Fri, 07/27/2018 - 04:38 Permalink

Yeah, another reason why I find the "breakdown" the government happily provides on my yearly earnings and tax paid a total joke.

They say I pay a few grand into the NHS according to that, yet all the money I get after those two taxes still has to pay VAT, fuel duty, road tax, tv license, custom duties....  I can probably double the actual contribution to the NHS.

If government a private company they'd have been successfully prosecuted for fraud a long time ago.

In reply to by Leakanthrophy

the cork bobcatz Wed, 07/25/2018 - 12:16 Permalink

Hey butt-wipe, are you STUPID or something?

You obviously don't get it.

The threat of punitive tariffs with the eu's largest trading partner (US) will reduce the european pussies protective tariffs once and for all.

Speaking of just how STUPID you are, President Trump proposed eliminating tariffs altogether at the G7 summit and the pussy europeans didn't want THAT.

They don't want a level playing field.

Feeling STUPID yet butt-wipe ?

In reply to by bobcatz