Proposed auto import tariffs on hold, for now

An escalating trade war that could adversely affect the U.S. automotive industry and its trading partners has been averted. For now.

Less than a week after dozens of representatives from businesses, trade organizations, and foreign trading partners met with a U.S. Department of Commerce panel and voiced their opposition to the proposed tariffs on imported automobiles and auto parts, President Trump backed off his 25-percent tariff threat during a meeting with European Commission President Jean-Claude Juncker on Wednesday at the White House, reports Bloomberg.

In a joint statement, Trump and Juncker agreed to “hold off on other tariffs” while they negotiate a deal to expand European imports of U.S. liquefied natural gas and soybeans and lower industrial levies. CNN reported that the two essentially made a deal to make a deal, agreeing to work toward eliminating all tariffs and barriers on trade. President Trump welcomed “a new phase” of trade relations and declared it a “very big day for free and fair trade.”

The European auto market reacted positively to the news, as shares of BMW AG, Volkswagen AG, Fiat Chrysler Automobiles NV, and Daimler AG surged on Thursday. Bloomberg.com reported that BMW climbed as much as 5.5 percent Thursday, while VW, Daimler, and Fiat all traded at least 2.6 percent higher.

Germany’s VDA auto industry association called the meeting “a big step forward” and “good news for industry and consumers on both sides of the Atlantic.”

In June, the EU responded to higher U.S. tariffs on steel and aluminum by imposing a 25-percent tariff on motorcycles, orange juice, bourbon, peanut butter, cigarettes, denim, and other goods. President Trump responded by proposing a 25-percent tariff on European car imports. That would add nearly $12,000 to the sticker price of a European-built car sold in the U.S., reports Bloomberg.

The EU holds a $150 billion trade surplus over the U.S., and Trump has complained about the EU’s 10-percent tax on imported U.S. cars, which is four times the 2.5-percent rate the U.S. places on imported European automobiles.

Last week, classic car broker Mark Hyman was among those who complained to the U.S. Department of Commerce panel, suggesting that the proposed tariff “has the potential to stop the import and export of vintage cars in the U.S.”