The European automotive sector will be one of the most affected, because tariffs are greater than in the US.
The White House points to European VAT as an additional obstacle to trade
Donald Trump has announced the imposition of reciprocal tariffs to several countries that apply those same taxes to American imported products. The measure will especially affect the European Union, especially in key sectors such as the automaker.
“If they manufacture their products in the United States, there will be no tariffs,” said the American president.
Currently, the EU imposes a 10% tariff on the importation of American cars, in contrast to the 2.5% that the United States applies to European vehicles. This European policy responds to Trump’s protectionist measures and seeks to protect its domestic market.
To a previous extent, the Trump administration imposed 25% tariffs on steel and aluminum imports, mainly affecting the European bloc and countries such as Canada, Mexico, Brazil, China and Taiwan.
In January, Trump already imposed a 25% tariff on all imports from Mexico and Canada, arguing that these countries did not cooperate enough in migratory matters and in the fight against drug trafficking. In addition, the measure seeks to strengthen the American industry and reduce commercial deficits. However, after the fall of the financial markets, these tariffs temporarily suspended for a month.
Trump also imposed an additional 10% tariff on Chinese imports, justifying it as a measure to combat what considers unfair commercial practices and reduce the commercial deficit with Beijing. This action is part of a broader strategy of commercial and geopolitical pressure.
Trump’s tariff policies have generated an increase in tensions in global commercial relations, causing reprisal fears and a negative impact on the world economy.
During his first mandate, Trump imposed multiple tariffs with the declared objective of protecting the US industry and reducing commercial deficits. In March 2018, he announced 25% tariffs on steel and 10% to aluminum, claiming national security reasons. Initially, Canada, Mexico and the European Union were exempt, but then these tariffs were applied. The EU responded with similar measures on American products such as motorcycles and whiskey. Biden, when assuming the presidency, replaced these rates with a quota system.
The commercial war with China also marked its first administration. Trump imposed tariffs on Chinese products for billions of dollars, claiming unfair practices. Beijing responded with tariffs on US goods, affecting key sectors such as agriculture. Biden, in his mandate, maintained most of these tariffs.
The tensions between the United States and the European Union intensified when the EU presented legal challenges to the World Trade Organization and applied tariffs in retaliation. Trump threatened to impose additional rates on European products, especially cars, which led to constant negotiations without these measures to materialize so far.
Now, the White House in charge of trade must calculate one by which tariffs each country applies, and design an identical response.
The decision places the European Union in a vulnerable position, especially in strategic sectors such as automotive and the pharmaceutical industry.
In addition, the European VAT system, with an average of 22%, has been indicated by the White House as an additional obstacle to trade, which could become another dispute front.
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