France-EU Combined Forces Against US Tariffs

According to the French government yesterday, the United States should anticipate combined forces from Europe for retaliation in increasing tariffs as Germany indicate signs open for negotiations. While Chancellor Angela Merkel stated on Thursday that she supports the reduction of EU levies on imported American vehicles, considering that the strong car industry of Germany is facing threats from the higher US tariffs.

US President Donald Trump imposed 25 percent tariffs on steel from  Canada, EU, and Mexico and 10 percent on aluminum earlier last month, which further ended exemptions levied since March. The tensions had escalated in June because Trump also threatened to place 20 percent import tariffs on every European-made vehicles, which might reverse the present business model for the car industry in the U.S.

Washington levied 2.5 percent tariff on imported EU passenger vehicles and 25 percent duties for imported pickup trucks, while the European Union require 10 percent tariffs for every imported cars from the US. With the rules of the World Trade Organization, the EU is not allowed to lower down import tariffs for US-assembled cars because this would apply to all WTO members.

However, French car manufacturers would likely be slightly affected the American duties because of its little exposure towards the US market. Also, France is worried about the possible stiff competition with the Asian manufacturers if EU tariffs were decreased.