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President Trump threatens 20 percent tariff on European cars

President Donald Trump has threatened to impose a 20 percent retaliatory tariff on automobile imports from the European Union. (Justin Sullivan/Getty Images)

President Donald Trump threatened Friday to slap 20 percent tariffs on European cars in retaliation for tariffs that the European Union imposed on the U.S. in retaliation for an original set of tariffs that the U.S. imposed on global steel and aluminum imports.

What did Trump say?

At 11:25 a.m. ET, Trump tweeted that if the EU didn't break down “trade barriers,” the United States would be slapping a 20 percent tariff “on all their cars coming into the U.S.” He ended with the exclamation “[b]uild them here!”

What caused this?

On March 1, Trump announced that the U.S. would be imposing a global tariff on all steel and aluminum imports into the U.S., citing national security concerns. Initially, the European Union, Canada, and Mexico were given exemptions to these tariffs, but the White House ended those exemptions on May 31.

Trump's threats come the same day that a new round of retaliatory tariffs imposed by the European Union against $3.2 billion worth of U.S. imports goes into effect. The EU tariffs will target products including blue jeans, bourbon, and motorcycles, and are in a direct response to the exemptions being revoked from the U.S. tariffs.

What's next?

Most likely even more tariffs.

After it announced the $3.2 worth of tariffs that took effect Friday, the EU threatened to slap tariffs on an additional $4.3 percent of U.S. products if the U.S. responded with any additional tariffs of its own.

What else?

The U.S. already has a 2.5 percent tariff on European cars. The European Union has a 10 percent tariff on cars imported from the United States.

On May 23, Trump instructed Commerce Secretary Wilbur Ross to investigate whether or not auto imports “threaten to impair the national security.” Ross said in a statement:

There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry. The Department of Commerce will conduct a thorough, fair, and transparent investigation into whether such imports are weakening our internal economy and may impair the national security.

Politico reported that the German auto industry has been open to reducing tariffs, but only if it ended up being part of a larger trade negotiation between the U.S. and the EU.

One last thing…
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