Fresh Salvos In Trade War: Trump Plans Tariffs On Auto Imports, EU Vows To Respond With Tariffs Worth $300 Billion

In an interview with Fox News on Sunday, United States President Donald Trump said that his plan to impose tariffs on imports of cars is his biggest leverage in trade talks, The Wall Street Journal has reported.

According to the report, Trump had threatened to impose tariffs on the import of cars from the European Union when the latter had chosen to respond to his tariffs on steel and aluminium imports with retaliatory duties on US exports.

“You know, the cars are the big one. We can talk steel, we talk everything. The big thing is cars,” Trump told Fox News on Sunday.

The announcement has come as a shock to the automobile industry.

The Washington-based National Association of Manufacturers has said that the tariff plan would "put the U.S. manufacturing sector at a global disadvantage, undermining growth and job creation throughout the United States."

Companies like General Motors, Toyota, BMW and Hyundai have also expressed disapproval, saying the move will deal a “devastating” blow to the industry.

“Increased import tariffs could lead to a smaller GM, a reduced presence at home and risk less – not more – US jobs,” the US’ largest automaker said.

The Trump administration has dismissed these concerns.

Peter Navarro, a top aide to Trump on issues of trade dismissed the concerns saying auto companies are using “smoke and mirrors” to deceive the public and added that the impact of the proposed tariffs on the price of a General Motors car would be equivalent to the cost of “a luxury floor mat.”

Navarro said factories in the US had become “assembly plants” and are only being used to stick together components made in other countries.

The tariffs that the Trump administration is planning to impose are mainly aimed at Mexico and the EU. While companies like General Motors manufacture a large part of their inventory in Mexico, the EU imposes 10 per cent tariff on car imports compared with the 2.5 per cent imposed by the US.

“The European Union is possibly as bad as China just smaller, OK. It’s terrible what they did to us. European Union - take a look at the car situation. They send a Mercedes in; we can’t send our cars in,” he said in the interview with Fox.

Talking about the discussions on the North American Free Trade Agreement with Mexico and Canada, Trump said “if they’re not fine, I’m going to tax their cars coming into America, and that’s the big one.”

The EU has responded to Trump’s threat saying retaliatory tariffs worth as much as $300 billion will be imposed on US imports if Trump moves ahead with new duties on European cars, CNBC has reported.