Germany's latest trade surplus might further push Trump to set vehicle tariffs

Trump Juncker

At a meeting in Washington, Trump and European Commission President Jean-Claude Juncker agreed to a political accord to "work together toward zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods".

"Were this report translated into action detrimental to European exports, the European Commission would react in a swift and adequate manner", EU spokesman Margaritis Schinas made the statement at a news briefing in Brussels.

"The vast majority of the estimated price impacts are attributable to the potential auto and parts tariffs that the Administration is considering imposing under Section 232 of the Trade Expansion Act of 1962, as amended", the report said.

Two people familiar with the matter earlier told AFP that the Commerce Department report has concluded that auto imports pose such a threat.

Germany recorded the world's largest current account surplus in trade for the third year running in 2018 due to strong exports that are vexing U.S. President Donald Trump and raising the risk of U.S. tariffs on German cars.

If European exports are hit by US actions, the EU will "react in a swift and adequate manner", Margaritis Schinas, a spokesman for the European Commission, told reporters in Brussels on Monday - a day after President Donald Trump received a report on the national security implications posed by auto imports.

"Today, Secretary of Commerce Wilbur Ross formally submitted to President Donald J. Trump the results of the Department of Commerce's investigation into the effects of imports of automobiles and automobile parts on the national security of the United States", the department said in a statement, without disclosing any details of the recommendations. The bloc retaliated imposing duties on 2.8 billion euros of USA imports, ranging from Harley-Davidson motorcycles to Levi Strauss jeans. Like other critics, the group has warned that new tariffs could backfire and not only result in the imposition of tariffs on US auto exports but also slam consumers with substantially higher prices, even on vehicles assembled in the U.S.

The United States is Germany's most important single export destination after the bloc of European Union countries.

"Look, we're proud of our cars".

"We put out a study last week, assuming that Canada and Mexico would be exempt, and found the average price of a vehicle sold in the United States would go up about $2,750 and sales would drop about 1.3 million", says Dziczek.

The White House received on Monday a Commerce Department report on the auto industry that could trigger tariffs against imported cars and intensify tensions with Europe. "If these cars - which are no less a threat than those built in Bavaria - are suddenly a national security threat to the USA, then that's a shock to us".

Trump said on Friday that tariffs protect industry and also help win trade agreements.

The International Monetary Fund and the European Commission have urged Germany for years to do more to lift domestic demand as a way to boost imports, stimulate growth elsewhere and reduce global economic imbalances.

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