European governments and industry leaders reacted with varying degrees of horror to President Trump’s threat to erect 25% auto tariff barriers.
But it’s not just tariffs which Trump wants to reform. He seeks to overturn what he considers to be a long-term conspiracy to block overall American exports by unfair and hidden means too.
One London commentator says Trump’s basic aim is to force Europeans to clear the decks for free trade.
European leaders have plenty of reasons to worry about the outcome of negotiations with the U.S., but it’s not the 25% tariff, starting April 3, they should be most worried about. After all the unfair current regime, where Europe charges American a 10% tariff on its sedan and SUV imports while the U.S. only insists on 2.5%, would be easy to equalize. It’s Trump’s overall policy to fix, once and for all, what he considers to be a long-term trade rip-off by Europe of the U.S. that should cause them sleepless nights.
That might well drag on and become a serious barrier to trade for months. Meanwhile European automakers like BMW and its Rolls Royce and Mini subsidiaries, Mercedes, and Volkswagen with its Porsche, Audi, Bentley and Lamborghini brands could bleeding serious money from the bottom line as U.S. sales stall.
Among the cries of outrage from Europeans were these, according to Reuters.
- EU Commission President Ursula Von Der Leyen – “Bad for business, worse for consumers”
- French President Emmanuel Macron – “Trump asked Europe to spend more on defense so it’s not coherent to impose tariffs on us”.
- German Economy Minister Robert Habeck – “What counts now is to have a firm response to these tariffs from the EU. It needs to be clear that we will not take this lying down”
- German Car Industry Association – “The announced additional U.S. tariffs of 25% on all cars and light commercial vehicles that are not made in the U.S. are a fatal signal for free and rules-based trade. The German auto industry is calling for immediate negotiations between the U.S. and the EU on a bilateral agreement”
These reactions seem to misunderstand Trump’s basic position.
Former U.S. ambassador to the EU Gordon Sondland expects the Trump Administration to seek huge overall changes to long-term unfair trading including non-tariff barriers. Trump has described the EU’s trade policy as “an atrocity.” Trump also claimed the annual U.S. trade deficit with the EU was more than $300 billion.
Sondland said in a recent interview with the BBC’s NewsNight program the EU imposes hidden barriers on American products. For cars, that can mean different safety standards. For food, there also are standards the EU doesn’t like. Hormone-fed beef is one area of contention.
“If we sell you a vegetable or a car or a product if it’s safe to use in the U.S. it should deemed to be safe to use in the EU,” Sondland said.
The U.S. is tired of talking about impediments to its foreign trade and wants action now, he said.
Sondland, who didn’t claim to speak for the Trump administration, was ambassador to the EU during Trump’s first term.
There is some good news for Europe because its aggressive reaction to the Trump demands suggests it misunderstands Trump’s position. According to Daily Telegraph of London columnist Sherelle Jacobs, Trump isn’t interested in seeking an unfair advantage for America, he simply wants to force countries using unfair trading methods to commit to free trade.
“Trump-sceptics love to deride the president for his branding of tariff imposition day as Liberation Day. But while the means are undoubtedly protectionist, the ends are essentially libertarian. Put simply, Trump is trying to beat countries with a stick until they agree to dismantle red tape that is holding back global demand for U.S. goods and services,” Jacobs said.
