European car makers put on notice as Trump threatens trade war

European car makers put on notice as Trump threatens trade war

The annual Geneva International Motor Show opens today amid rapidly escalating threats of a transatlantic trade war after Donald Trump’s

german-automakers-set-for-record-output-expect-further-growth-in-2018-vda

Photo: Reuters

The annual Geneva International Motor Show opens today amid rapidly escalating threats of a transatlantic trade war after Donald Trump’s announcement on raising tariffs on EU vehicle imports.

Trump has long complained of trade imbalance between the US and various trading partners; for instance, Germany exported $64 billion more than it imported from the US in 2017 and exports $23 billion of vehicles to the US annually.

A trade war presents risks to Europe’s automakers, who unveil their new lineup of electric and hybrid vehicles today. Audi’s E-Tron and Jaguar’s I-Pace would likely lose out to America’s Tesla Model-S vehicles in such a war.

However, a trade war would also hit German automakers based in the US, namely Volkswagen, BMW and Daimler, which together produced more than 800,000 vehicles in the US last year, over 50% of which were exported.

Retaliatory tariffs from China and the EU, where most US-built German car exports go, puts 36,000 US jobs at risk, mostly in Republican states. Expect Trump to face increasing pressure at home—his economic adviser resigned yesterday disputing Trump’s proposed tariffs. Also, expect automakers to lobby Angela Merkel’s to de-escalate tensions.

 

Start your day with an open-source intelligence briefing. Download The Daily Brief app.