US President Donald Trump has postponed his decision on threatened tariffs on auto imports from the European Union and Japan for half a year. Trump published a corresponding official statement on Friday. Accordingly, it will now be negotiated first on corresponding trade agreements.
The same day, the US president announced an agreement with Canada and Mexico. According to him, the special duties he imposed on steel and aluminum imports from the two countries should be lifted within 48 hours. It is the first time that Trump abolishes tariffs as part of its "America First" strategy.
Trump is bothered that the US trade balance has been down for years. He sees the enormous balance as a result of the policies of other countries, which in his view, unfairly promote their export economies. He is putting pressure on large trading partners to import more from the US. In the guise of national security, in the spring of 2018, he covered the entire world with special tariffs on steel and aluminum. Many countries then introduced retaliatory tariffs against the US.
Trump is going to Japan next week
The EU and Japan now have six months to reach an agreement with Washington and avert tariffs on car imports. Trump will travel to Japan next week and meet with Prime Minister Shinzo Abe, among others. EU Trade Commissioner Cecilia Malmström will also hold talks with US Trade Representative Robert Lighthizer next week.
The goal is to come to a limited free trade agreement only for industrial goods and completely reduce the mutual tariff barriers on all industrial products. The agreement was reached by Trump and EU Commission President Jean-Claude Juncker in July last year.
German Federal Minister of Economics Peter Altmaier (CDU) said the EU is ready to conclude an industrial tariff agreement with the US, which will reduce tariffs on both sides to zero. It is regrettable that "the US now classifies car imports as a threat to national security."
Trump reserves itself further customs duties
US Secretary of Commerce Wilbur Ross had submitted a report to the White House in mid-February for investigation. He concluded that car imports pose a threat to US national security.
Ross argued that the development potential for automotive engineering also had a military dimension. If this were taken from domestic manufacturers by a dominance of foreign suppliers in the car market, this could have an impact on national security. The argument is considered threadbare among experts. The US is unassailable in armament technology worldwide.
According to Trump US manufacturers had in 2017 in the American car market with 3.7 million units produced and sold in the United States only a market share of 22 percent – 1985 had been 67 percent. In the same period, auto imports from abroad almost doubled from 4.6 to 8.3 million units. The lion's share of imported vehicles comes from Japan.
Trump reserves the right to impose tariffs if successful negotiations are not completed within 180 days. The German manufacturers would be particularly hard hit. They account for a large proportion of EU exports to the US. In addition, manufacturers such as VW, Daimler and BMW as well as suppliers have their own locations in the USA. Among other things, they supply the Chinese market. From there, further punitive measures threaten the retaliation of Trump's special tariffs against imports from China.
Agreement with Mexico and Canada possible model for EU
Trump explicitly mentioned on Friday the finalized agreements with South Korea and its neighbors Mexico and Canada as possible models for agreements with the EU and Japan. Among other things, the agreement in South Korea agreed to double imports of US cars and to bring the standards, such as emissions tests, into line.
The US, Canada and Mexico had agreed on a new free trade agreement called USMCA, but it still has to be signed by the parliaments of the three countries. MEPs had considerable reservations, mainly because of the steel and aluminum tariffs, which were lifted on Friday.
In addition to waiving the tariffs, the three countries also agreed to settle all litigation in the matter. In addition, they want to act effectively against transit steel, which comes from China, for example, and is passed on to the other country. For the abolition of tariffs, the two neighboring US countries must therefore ensure that steel from China can not enter Canada via Mexico or Mexico.
Canada's Prime Minister Justin Trudeau said he wanted to move forward with the common free trade agreement. There is no sense in raising tariffs on steel and aluminum. Mexican Deputy Foreign Minister Jesús Seade welcomed the agreement. They pave the way for ratification of the USMCA, he wrote on Twitter. (dpa)