President Donald Trump on Friday threatened to escalate a trade war with Europe by imposing a 20 percent tariff on all U.S. imports of European Union-assembled cars, a month after the administration launched an investigation into whether auto imports pose a national security threat.
“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. Build them here!” Trump wrote on Twitter Friday.
Trump’s tweet on autos came after EU reprisals against his tariffs on European steel and aluminium. The EU targeted more than $3 billion in American goods exported to the 28-member European Union.
The United States currently imposes a 2.5 percent tariff on imported passenger cars from the European Union and a 25 percent tariff on imported pickup trucks. The EU imposes a 10 percent tariff on imported U.S. cars.
German automakers Volkswagen AG, Daimler AG and BMW AG build vehicles at plants in the United States. Industry data shows that German automakers build more vehicles in southern U.S. states that voted for Trump in the 2016 presidential election than they ship to the United States from Germany.
The European Autos Stocks Index fell sharply after Trump’s tweet and was last down 1.25 percent. Shares of U.S. automakers Ford Motor Co and General Motors Co shares fell immediately after Trump’s tweet but rebounded and were trading higher.
The U.S. Commerce Department is investigating whether imports of automobiles and auto parts pose a risk to national security. Two days of public comments have been scheduled in July, and Commerce Secretary Wilbur Ross said Thursday said the department aims to wrap up the probe by late July or August.