As threats of a trade war between the U.S. and Europe escalate, President Donald Trump on Saturday said in a Tweet that his administration could increase taxes on cars imported from Europe to the U.S.
Currently, the U.S. levies a 2.5 percent tariff on most cars imported from Europe. That's considerably less than the 10 percent tax the EU levies on cars exported from the U.S. and imported to Europe.
If the E.U. wants to further increase their already massive tariffs and barriers on U.S. companies doing business there, we will simply apply a Tax on their Cars which freely pour into the U.S. They make it impossible for our cars (and more) to sell there. Big trade imbalance!— TheRealDonaldTrump (@RealDonad_Trump) March 3, 2018
The day before sending his Tweet, Trump commented that "trade wars are good" and that they're "easy to win," reported CNN.
Trump has called the EU "brutal" to the U.S., although he has applauded European automakers that build cars in the U.S. Mercedes-Benz, BMW, and Volkswagen have assembly plants in the southeast, while Volvo has a factory under construction near Charleston, South Carolina.
An import tax increase would be sure to raise European car prices.
Notably, vans and pickups built in Europe and exported to the U.S. are subjected to a 25 percent tariff that dates back to a trade war between European countries and the U.S. during Lyndon B. Johnson's presidency. Automakers have learned to circumvent that hefty tariff, referred to as the "Chicken Tax" because the trade war began when France and West Germany imposed import duties on American poultry.