World powers on Thursday condemned US President Donald Trump’s steep tariffs on car parts and imports, promising retaliation as the trade war gets worse.
Japan said it “will consider all options,” while Germany, a major auto exporter, demanded a swift response from the EU.
As automakers from Toyota to Hyundai and Mercedes led the decline, the stock markets in Asia and Europe sank into a sluggish state.
On April 3, US duties will start at 12:01 am (0401 GMT) and will affect imported vehicles and light trucks. Within the month, important car parts will also be delivered.
A 25% tariff will be applied to all vehicles that are not produced in the United States, according to the company. There is no tariff at all if products are made here, according to Trump at the White House.
Eric Lombard, France’s finance minister, said that “the only way to fix this will be to raise tariffs on American goods in response.”
Mark Carney, the prime minister of Canada, announced a meeting on Thursday to “discuss our trade options.”
Trump increased his threats as one of the world’s largest trading partners forewarned retaliatory action.
“If the European Union collaborates with Canada to cause economic harm to the United States, significant tariffs, far higher than planned, will be applied to both of them to safeguard their closest friend, which each of those two nations has ever had”! Trump made a post on his TruthSocial account.
However, Elon Musk, Trump’s top ally and Tesla boss, acknowledged that their businesses would not be spared the pain, which also shook domestic manufacturers.
To be clear, the cost of parts imported from other nations will be affected by this. Musk wrote on X that the cost impact is not trivial.
The American Automakers warned in a statement that the industry’s competitiveness must be preserved and that the tariffs must be put in place in a way that “avoids raising prices for consumers.”
– ‘ Cheaters ‘ –
According to previous estimates from The Center for Automotive Research, US tariffs, including those on imported metals and cars, could cause thousands of dollars in increases in the cost of a car and impact the employment market.
However, in a briefing following Trump’s announcement, Peter Navarro, the senior trade and manufacturing adviser, criticized “foreign trade cheaters” who claimed had transformed the country’s manufacturing industry into a “lower wage assembly operation for foreign parts.”
He criticized Japan and Germany for limiting their nations’ ability to construct higher-value infrastructure.
Trump has imposed new tariffs on imports from major US trading partners, including a 25% duty on steel and aluminum, since he first took office in January.
The most recent levies will be added to those in place already.
However, according to the White House, vehicles that are included in the US-Mexico-Canada Agreement (USMCA) may be eligible for a lower rate depending on their American content.
As a result of officials’ efforts to target their non-US content, tariff-free auto parts will also be established.
– “Devastating impact” –
Financial markets have been roiled by Trump’s trade plans, which have also fallen recently, along with consumer confidence.
Trump has defended the levies as a means of boosting American industry and raising government revenue.
However, focusing on imported vehicles might strain ties with allies like Japan, South Korea, Canada, Mexico, and Germany.
Former US trade negotiator and vice president at the Asia Society Policy Institute, Wendy Cutler, predicted that the enactment of 25% tariffs on imported cars would be devastating for many of our close trading partners.
She continued, “calling into question the value of US commitments” under a trade agreement because Washington has free-trade agreements with some of the parties involved.
About one in two American automobiles are produced there. About half of imports are made by Mexico and Canada, with major imports made of Japan, South Korea, and Germany.
More than half of the US-made vehicles were assembled using foreign components, according to a White House official.
‘Liberation Day’ –
Trump is considering sector-specific tariffs, such as those for pharmaceuticals, semiconductors, and lumber, in addition to the auto industry.
The announcement on Wednesday comes inainte of Trump’s upcoming “Liberation Day” on April 2 for the world’s largest economy.
To address practices Washington found to be unfair, he has promised reciprocal levies that can be applied to various trading partners. He stated on Wednesday that all nations will be affected by these obligations.
Trump’s auto levies are based on a government investigation that was finished in 2019 and have invoked emergency economic powers for some recent tariffs.
The investigation discovered that excessive imports had the potential to harm national security and weaken the domestic economy.
