Tata Motors nosedives 4% as U.S. threatens 20% tariff on European Union cars

The effects of US President Donald Trump's tariffs on various countries aren't big enough yet to classify as a true

SUSAN WALSH AP The effects of US President Donald Trump's tariffs on various countries aren't big enough yet to classify as a true trade war

Ushered in in response to Trump's duty on steel and aluminium imports, the tariffs target American consumer goods worth US$3.3 billion and cover a wide range of products from Levi jeans to USA eye make-up and lipstick.

Trump told carmakers at a meeting in the White House on May 11 that he was planning to impose tariffs of 20 or 25 percent on some imported vehicles and sharply criticized Germany's automotive trade surplus with the United States. Shares of United States automakers Ford Motor Co and General Motors Co shares fell immediately after Trump's tweet but rebounded and were trading higher. The US commerce Department has until February 2019 to inspect whether the importing of automobiles and auto parts poses a threat to the USA national security. Presently, the United States imposes a 2.5 % tariff on all passenger cars coming from the European Union and 25% on pickup trucks. The Commerce Department plans to hold two days of public comments in July on its investigation of auto imports. Moreover, in 2017, the United States accounted for up to 15 percent of the worldwide sales for Mercedez-Benz and BMW. On the other hand, the European Union levies 10% tariff on cars imported from the US.

Mr Trump has threatened duties on up to $450 billion of imports from China. Chinese reprisals have hit American farmers already. Trump would first have to negotiate World Trade Organization rules and this may not be possible.

German automakers did not comment on Trump's tweet. Additionally, a representative group of carmakers in the United States and foreign countries have said that they areconfident that importing vehicles is not a risk to national security.

German auto industry association VDA said Germany exported 657,000 cars to North America, 7 percent less than a year earlier, and 200,000 fewer cars than in 2013.

Shoppers across Europe will soon see their favourite USA brands become more expensive as The European Union's retaliatory tariffs came into force on Friday, according to a report published by Sky News.

Sales to the USA fell 10 percent to 494,000 vehicles, while Germany automakers produced 804,000 vehicles in the United States past year.

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