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President Trump’s unexpected plan to impose a 25 percent tariff on cars and car parts imported into the United States will not only disrupt supply chains, but also fuel anger, alienation, and pressure to retaliate among American allies across the globe.
Many of the countries most affected by the new levies, such as South Korea, Japan, Germany, Mexico, and Canada, are already reeling from the Trump team’s disregard for free trade deals already signed and his threats to long-established security relationships.
The tariffs, which threaten both American and foreign carmakers, increase the likelihood of a global trade war. A chain reaction of economic nationalism with tariffs and other measures could suppress economic growth globally, spread inflation, and add rancor to already testy negotiations with Washington about security.
The European Union, which governs trade policies for its 27 member states, has been working for months on proposals for counter-tariffs if necessary. Those are designed to target areas of the United States that supported Mr. Trump in the last election. The United States is the E.U.’s largest trade partner, with nearly a trillion dollars of two-way trade last year, so new tariffs and counter-tariffs will have a dramatic impact on both sides and sharply increase market uncertainty.
European countries, especially Germany, export many more cars to the United States than they import. Anger about this disparity has been a regular theme for Mr. Trump since the 1980s, long before he went into politics, when he often complained about the number of German and Japanese cars on American streets.
The United States is the most important export market for Germany’s auto industry, and the largest three German carmakers make up about 73% of the European Union’s automotive exports to the United States. “It is now important for the E.U. to respond decisively to the tariffs – it must be clear that we will not back down in the face of the U.S.,” Robert Habeck, Germany’s acting economics minister, said in a statement on Thursday.
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