Trump threatens 20 per cent tariffs on cars built in the European Union fuming 'build them here!' in latest trade war threat against an ally

  • The swipe came hours after the EU slapped $3.3 billion tariffs on U.S. products
  • Europe was responding to Trump's tariffs on steel and aluminum 
  • Trump blasted EU tariffs on U.S.-manufactured
  • Said if they are not removed soon the U.S. would put tariffs on 'all of their cars'
  • The administration has been looking at same national security exception used to impose steel tariffs 
  • 'Build them here!'
  • European auto companies have set up factories in the U.S. to reach the market

President Donald Trump fired another shot in his trade war with European allies, threatening to impose a 20 per cent tariff on European autos.

Trump blasted steep European Union import duties on U.S. cars, a month after his administration began an investigation of whether European duties on cars posed a threat to U.S. national security.

Trump leveled the threat hours after the EU slapped $3.3 billion tariffs on U.S. products. Those tariffs were structured in a way so as to try to drive attention and target particular Republican strongholds – with tariffs on bourbon and Harley Davidson motorcycles.

That action was a response to Trump's decision to impose a 25 per cent tax on steel and a 10 per cent tax on aluminum – and to not exempt European allies from the tariff. 

President Donald Trump threatened to impose a 20 per cent tariff on European autos

President Donald Trump threatened to impose a 20 per cent tariff on European autos

'Build them here!' Trump wrote after his warning in the midst of a trade war with Europe and China

Trump used a special national security exception to take the trade action, allowing him to avoid going through Congress. 

'Based on the Tariffs and Trade Barriers long placed on the U.S. and it great companies and workers by the European Union, if these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the U.S.,' Trump wrote on Twitter Friday.

'Build them here!' he concluded.

The European Union puts a 10 per cent tariff on U.S.-made cars. The huge U.S. market draws imports from European manufacturers. Germany is Europe's leading auto manufacturer.

But foreign companies also make cars in U.S. plants in South Carolina, Alabama, and Tennessee.   

Workers drive newly manufactured Audi AG automobiles wrapped in protective film onto the Grimaldi Lines 'Grande Roma' vehicle carrier during loading operations by Setram SA at the port of Barcelona in Barcelona, Spain, on Thursday, March 15, 2018

Workers drive newly manufactured Audi AG automobiles wrapped in protective film onto the Grimaldi Lines 'Grande Roma' vehicle carrier during loading operations by Setram SA at the port of Barcelona in Barcelona, Spain, on Thursday, March 15, 2018

Worker assemble parts for wheels during production of a Volvo AB S60 sedan at the Volvo Cars USA plant in Ridgeville, South Carolina, U.S., on Wednesday, June 20, 2018

Worker assemble parts for wheels during production of a Volvo AB S60 sedan at the Volvo Cars USA plant in Ridgeville, South Carolina, U.S., on Wednesday, June 20, 2018

The EU has put tariffs on emblematic American products like jeans

The EU has put tariffs on emblematic American products like jeans

The tariffs, which took effect at midnight according to the EU's official journal, will further fuel jitters on world stock markets that are already alarmed by trade tensions between the United States and China.

Customs agents across Europe's colossal market of 500 million people will now impose the duty, hiking prices on US-made products in supermarkets and across factory floors.

'These measures are the logical consequence of the US decision,' French Finance Minister Bruno Le Maire told AFP.

'They reflect a Europe that is resolute and principled,' he said.

Brussels imposed the raft of duties on US products worth $3.3 billion in a tit-for-tat response to Trump's decision to slap stiff tariffs on European steel and aluminum exports.

Global markets on Friday took the development in stride, with stocks in Europe firm after weeks of instability on trade worries.

EU Trade Commissioner Cecilia Malmstrom said this week that the 28-nation bloc was 'left with no other choice' but to impose tariffs of its own after the 'unilateral and unjustified decision of the US.'

Together with US tariffs against Mexico and Canada, the trade battles have raised the spectre of a global trade war, spooking financial markets that fear major consequences to the global economy.

'We have a trade war -- and it's an escalating trade war,' SEB chief economist Robert Bergqvist told AFP in an interview.

John Ferguson, director of global forecasting at the Economist Intelligence Unit agreed, as he sounded a warning about the US trade disputes rumbling on the EU and Chinese fronts.

'Mr Trump has now opened up two fronts of this conflict and both have the potential to escalate out of control,' Ferguson said.

- 'Symbolic impact' -

The list of goods subject to EU duties does not specifically name brands but European Commission chief Jean-Claude Juncker spelled out in March that the bloc would target 'Harley-Davidson, bourbon and Levi's jeans'.

Cigarettes, cranberries, cranberry juice, orange juice, sweetcorn and peanut butter are among the other products targeted.

Juncker said on Thursday that the US decision to impose tariffs 'goes against all logic and history'.

'Our response must be clear but measured. We will do what we have to do to rebalance and safeguard,' he said.

European consumers would be able to find 'alternatives', European Commission Vice President for trade Jyrki Katainen said.

'If we chose products like Harley Davidson, peanut butter and bourbon, it's because there are alternatives on the market. We don't want to do anything that would harm consumers,' he said on Thursday.

'What's more, these products will have a strong symbolic political impact.'

International Monetary Fund (IMF) chief Christine Lagarde warned on Thursday that trade war, as well as Brexit, were the key risks to the eurozone economy.

While she didn't see a serious 'direct impact of tariff increases... it's a trend that is worrying, the breach of confidence that undermines confidence,' she said on the sidelines of eurozone minister talks in Luxembourg.

- Relations reach new lows -

Transatlantic ties are at their lowest level for many years due to rows over a host of issues including the Paris climate agreement and the Iran nuclear deal.

Relations plumbed new depths at the recent G7 summit when Trump abruptly rejected the joint statement and bitterly insulted his Canadian host, Prime Minister Justin Trudeau.

Harley Davidson motorbikes are among the US products facing EU tariffs

Harley Davidson motorbikes are among the US products facing EU tariffs

Trump claimed America had been obliged to levy the metals tariffs as it has been exploited as the world's 'piggy bank'. He is also targeting EU auto imports with a US probe now underway.

Trump's outbursts were the latest in which he has clashed with America's closest allies, even as he has had warm words for autocrats like North Korean leader Kim Jong Un, with whom he had a historic meeting earlier this month, and Russia's Vladimir Putin.

But US Assistant Secretary of State for European and Eurasian affairs Wess Mitchell said on Thursday that Trump's approach towards his allies was about 'strategic renovation'.

'Strengthening the West means making hard decisions today when we initially disagree, rather than continuing to accept the appearance of transatlantic unity,' he told the Carnegie Europe think-tank in Brussels.

A spokesman for Jaguar Landrover said it was 'concerned' about the potential implications for its exports, adding: 'The US is a key market for Jaguar Land Rover. Fair trade, without additional tariffs, is essential for us to remain competitive as a business.'