As traders around the world scanned for the next morsel of news about trade talks between the US and China ahead of this weekend's dinner meeting between President Trump and President Xi Jingping, a German newspaper sent stocks in Europe and the US spiraling lower on Tuesday when it reported that the White House could impose auto tariffs on all countries except Canada and Mexico as soon as next week, which the market swiftly interpreted as a sign that there was little justification for optimism for the G-20 meeting, and that the US would press ahead with its protectionist policies.
Though that report was swiftly denied by European officials, who said that a purported planned meeting with EU trade negotiator Cecilia Malmstrom and US Trade Rep Robert Lighthizer had never been scheduled, President Trump hinted in a tweet Wednesday morning that he was leaning toward tariffs, sending shares of European and US automakers modestly lower.
And despite the fact that GM has repeatedly warned that Trump's trade war would force it to close factories and shed jobs, Trump claimed that the lack of auto tariffs in the US was what prompted GM's decision - because if the US had higher trade barriers, more of the cars sold in the US would be built in the US. Trump also claimed that the reason small trucks in the US are "such a go to favorite" is because we have a 25% tariff on small trucks. In perhaps his strongest hint that the long-feared auto tariffs could be on the way, Trump said these issue are "being studied now!"
The reason that the small truck business in the U.S. is such a go to favorite is that, for many years, Tariffs of 25% have been put on small trucks coming into our country. It is called the “chicken tax.” If we did that with cars coming in, many more cars would be built here.....— Donald J. Trump (@realDonaldTrump) November 28, 2018
.....and G.M. would not be closing their plants in Ohio, Michigan & Maryland. Get smart Congress. Also, the countries that send us cars have taken advantage of the U.S. for decades. The President has great power on this issue - Because of the G.M. event, it is being studied now!— Donald J. Trump (@realDonaldTrump) November 28, 2018
The Commerce Department has until February to finish a report on whether auto tariffs would be warranted, but reports that the White House has started reviewing findings in a draft report have circulated over the past week. The news sent shares of GM back into the red: