American Donald Trump has vowed to tax European car imports into the US if the European Union raises its tariffs on American companies doing business there.
"If the EU wants to further increase their already massive tariffs and barriers on U.S. companies doing business there, we will simply apply a Tax on their Cars which freely pour into the U.S.," Trump said in a tweet on Saturday. "They make it impossible for our cars (and more) to sell there. Big trade imbalance!"
The threat comes on the heels of criticism from Jean-Calude Juncker, the president of the European Commission, who said the EU would "react firmly and commensurately" to increased US tariffs on steel and aluminium.
If the E.U. wants to further increase their already massive tariffs and barriers on U.S. companies doing business there, we will simply apply a Tax on their Cars which freely pour into the U.S. They make it impossible for our cars (and more) to sell there. Big trade imbalance!— Donald J. Trump (@realDonaldTrump) March 3, 2018
"Instead of providing a solution, this move can only aggravate matters," Juncker said in a statement Thursday. "The EU has been a close US ally for decades. We will not sit idly while our industry is hit with unfair measures that put thousands of European jobs at risk. I had the occasion to say that the EU would react adequately and that's what we will do."
Juncker lashed out again on Friday, saying "this is basically a stupid process," warning that the EU will now impose tariffs on motorcycles, blue jeans, and Bourbon.
"We can also do stupid. We also have to be this stupid," he said.
Passenger vehicles are a major export item for South Africa.
In the 2017 year total vehicle exports from South Africa fell slightly, but in 2018 the National Association of Automobile Manufacturers of South Africa (Naamsa) hopes to see an 11% spike, with total vehicle exports of 366,000 units.
That had expectation had been based on the assumption that the global economy would continue to improve – and that there would not be a trade war in the automotive sector.
On Thursday, Trump promised new American tariffs — taxes on imports — of 25% on steel and 10% on aluminium. He did not specify if any countries would be exempted, but the restrictions are expected to be wide-ranging.
"[US steel and aluminum industries have] been horribly treated by other countries," Trump said. "They have not been properly represented. More importantly, because of that, our workers in our country have not been properly represented."
In January, iron and steel represented almost a quarter of all South African exports to the US.
A group of US industry leaders, who joined Trump at the White House during his announcement, defended the move.
"Having been somebody that has global views and believes in free trade, we know when it's completely unfair," said Dave Burritt, the CEO of the US Steel Corporation. "We are not protectionists. We want a level playing field. It's for our employees to support our customers."
But business leaders in other countries, including Canada, Mexico, and Brazil, condemned Trump's announcement.
“I feel Trump’s decision is stupid," Li Xinchuang, the vice chairman of the China Iron and Steel Association, told The New York Times. "It will only make the US steel industry, which is already 10 years behind China, more left behind."
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