Germany has said it “will not give in” and that Europe must “respond firmly” as US President Donald Trump targets imported cars and car parts with a 25% tax in his latest tariffs.
Other major world economies have vowed to retaliate, with France branding the move “very bad news”, Canada calling it a “direct attack”, and China accusing Washington of violating international trade rules.
Early on Thursday, shares in Frankfurt for Porsche, Mercedes and BMW fell sharply alongside French firm Stellantis, the maker of Jeep, Peugeot and Fiat.
Trump has threatened to impose “far larger” tariffs if Europe works with Canada to do what he describes as “economic harm” to the US.
The fresh car tariffs will come into effect on 2 April, with charges on businesses importing vehicles starting the next day. Taxes on parts are set to start in May or later.
Trump has long maintained the tariffs are part of a drive to help US manufacturing and says if cars are made in America there will be “absolutely no tariff”.
Tariffs are taxes charged on goods imported from other countries.
While the measures can protect domestic businesses, they also raise costs for businesses reliant on parts from abroad.
The companies that bring the foreign goods into the country pay the tax to the government. Firms may choose to pass on some or all of the cost of tariffs to customers.
The US imported about eight million cars last year – accounting for about $240bn (£186bn) in trade and roughly half of overall sales.
Mexico is the top supplier of cars to the US, followed by South Korea, Japan, Canada and Germany.
German economy minister Robert Habeck said the European Union must “respond firmly”.
Credit: bbc.com
