US auto industry dispute intensifies and prepares for worst case scenario

US auto industry dispute intensifies and prepares for worst case scenario

On Sunday, Canada - a country that, by the way, imports about as much from us as it exports in return - announced retaliatory tariffs against $12.6 billion of USA products.

The warning was included in the European Commission's written response to the Donald Trump administration's investigation into imports of cars and auto parts.

Back in December, the Chamber of Commerce supported Trump's business tax cuts and has historically cooperated with Republican presidents.

US Chamber president Thomas Donohue said: "Tariffs are simply taxes that raise prices for everyone".

On Monday, the country's largest business group launched an online campaign against President Donald Trump's hardline stance on trade, which his press secretary described as a way to "create a fair playing field" for USA businesses.

The association's comments further explained that "the availability of affordable high-quality parts from foreign sources creates thousands of jobs that might be threatened should the Trump administration move forward with a tariff on vehicles and vehicle parts".

While many other issues are dominating the headlines - the Supreme Court, immigration, and developments in the Russian Federation investigation - the slow burn of the United States' looming trade war may become one of the most significant stories in the months to come. At the top of the list is Washington state, which could see tariffs on more than $6 billion in exports - more than half of it aimed at sales of soybeans. China has threatened to retaliate in kind with its own tariffs on USA agricultural products and other goods.

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Trade restrictions are likely to lead to higher input costs for U.S. based producers, thus in effect becoming a tax on American consumers.

European auto manufacturers in the United States export 60% of their cars, which helps the USA trade balance - a number Trump has been focused on.

Tusk thinks Trump's action on tariffs, pulling out of the global climate agreement and withdrawing from the Iran nuclear deal - an agreement the Europeans say is vital to their security - is part of a pattern rather than isolated incidents.

The largest USA trade association for the auto components industry, the Motor & Equipment Manufacturers Association, said tariffs or other restrictions would mean job losses among the 871,000 auto parts industry workers and would damage US competitiveness. But Italy blocked their formal adoption until the migration issue was fully addressed.

Another official described the dispute between Trump and Western allies at the Group of Seven summit last month as a gift to Beijing because it showed European leaders losing a long-time ally, at least in trade policy. Traders are reacting to retaliatory events and the imposition of fresh tariffs at the end of the week.

The US leader had already threatened to impose tariffs on cars imported from the European Union, in response to the bloc's retaliatory tariffs last week on popular US products including jeans, bourbon and motorcycles.

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