WASHINGTON — President Donald Trump escalated the potential for a trade war between the U.S. and Europe on Friday by threatening 20 percent tariffs on auto imports from the European Union in response to retaliatory tariffs on $3.3 billion worth of American products.
Trump has repeatedly rebuked German automakers and European governments for the trade deficit in passenger vehicles as he seeks to boost domestic producers.
"I can't find a single company that is calling for protection from international competition, and frankly not even a single group of employees that has called for this either," John Bozzella, president of Global Automakers, representing international brands in the U.S., said at a panel discussion here.
The EU spat, sparked by Trump's decision to impose tariffs on U.S. steel and aluminum imports, is the latest in a series of trade-related risks that could upset automakers' complex global supply chains, where production is sourced to optimize logistics efficiency and contain costs. European imports account for 7.2 percent of U.S. new-vehicle sales this year, according to the Automotive News Data Center.
The Trump administration also is considering 25 percent global tariffs on autos and auto parts if those imports are determined a risk to national security.
The Wall Street Journal reported that German automakers have proposed an end to car tariffs between the EU and U.S. in exchange for Trump dropping the 25 percent border tax on European auto imports.
The EU tax on imported autos is 10 percent, while the U.S. tariff on most countries is 2.5 percent for autos and 25 percent for light-duty trucks.
Citing sources, the Journal said German automakers support removing all the tariffs.
Interviewed on CNN, Bozzella said the solution is fewer trade walls to provide more opportunities for exports.
"We've been believers in the idea of a U.S.-European Union trade agreement that would address automotive trade barriers like tariffs" and aligning regulations to streamline compliance, he said.
Under the Obama administration, the U.S. and EU were negotiating a transatlantic free-trade deal to eliminate major tariff and nontariff trade barriers. The Transatlantic Trade and Investment Partnership would have represented a massive free-trade agreement, encompassing almost 40 percent of all new-car sales and a third of global car production.
Tariffs between the U.S. and EU already are low, so the big advance was harmonizing regulations to keep companies from having to produce two versions of each model.
Trump's disdain for multilateral trade deals, promotion of America First policies and insults to Germany left the talks dead in the water, although Commerce Secretary Wilbur Ross recently signaled willingness to resume them.