President Donald Trump’s tariff threats targeting European auto makers are continuing to raise eyebrows even after his commerce secretary backed away from a deadline set in August to determine whether to enact stiffer tariffs on European auto imports. The White House has been feeling pressure from the auto industry in the US to back away from the proposed stiffer tariffs. Critics feel that such protectionist measures will be counterproductive to the already fragile US auto industry that gained a bit of growth momentum over the last ten years after a near collapse during the financial crisis.
However, the president has been clear that something needs to change on auto imports from Europe. During a rally in West Virginia earlier this week, Trump made this issue his main topic arguing that the US auto industry will benefit significantly from these stiffer measures. However, the president didn’t back this claim with any facts or actionable strategy. There was no proof presented during the rally that Europe and China have treated the US auto industry unfairly.
In fact, the president went on to make false remarks. At one point, he accused China of imposing massive tariffs on US cars citing the example of the Chevrolet Camaro. The president claimed that a customer in China would have to pay nearly $119,000 for the car while consumers in the US pay only $25,905. While China has imposed a 25% tariffs on all cars imported from the US, the overall cost to the consumer is not as high as the president claims. When you factor in the tax and the shipping costs, the Camaro costs $58,430 in China, almost half the figure quoted by Trump.
The president also claimed in front of a passionate crowd in the “Make America Great Again” rally that there weren’t many Chevrolet cars in Berlin. While this has some sense of truth in it, the fact that Europe doesn’t have many Chevrolets is not entirely based on trade restrictions. It was merely a strategy by GM, one of the largest automakers in the US to pull the brand out of Europe to focus more on the Opel/Vauxhall subsidiary. The subsidiary was later sold to the PSA Group, a French rival in the market.
Despite what appears to be misinformation, the president has continued to threaten very radical trade restrictions on European-made cars as part of a “response” to what he considers “unfair trade practices.” In a meeting with French President Emmanuel Macron this year, Trump reportedly threatened to ban the sales of Mercedes-Benz in New York City and other US states. The president also ordered his commerce secretary Wilbur Rose to look into whether auto imports in the US were a threat to national security. In the West Virginia rally, the president added that his administration is planning to put a 25% tariff on all cars coming into the US. All these actions indicate that Trump definitely wants to do something but experts in the auto industry don’t see this strategy working as the president expects.
