...
By Sophie Clark
Live News Reporter
0
Share
Newsweek is a Trust Project member
See more of our trusted coverage when you search.Prefer Newsweek on Googleto see more of our trusted coverage when you search.
President Donald Trump has issued an ultimatum to Canada and the European Union, warning that they will face "large scale tariffs" if they do economic harm to the United States.
Writing on Truth Social at 1.50 a.m. ET on Thursday morning, Trump said he will hit the E.U. and Canada with tariffs "far larger than currently planned" if they work together to "do economic harm to the USA."
The threat came hours after Trump announced plans to place 25 percent tariffs on all auto imports from April 3. "This will continue to spur growth," Trump said on Wednesday. "We'll effectively be charging a 25 percent tariff."
Read More
Canada Vows To Retaliate to Trump’s ‘Direct Attack’3 min read
Trump Announces 25 Percent Tariff on Cars Made Outside US: ‘Liberation Day’4 min read
Autos Group Warns Trump on EU Tariffs4 min read
...
Why It Matters
Concerns about a trade war are unsettling markets and creating fears of a recession in the U.S.. Some Canadian customers are boycotting American products and Canada has barred Tesla vehicles from being eligible for the county's electric vehicle rebate because of the tariffs.
The White House projects the new auto tariffs will generate $100 billion in annual revenue, but auto industry analysts warn that the move could disrupt global supply chains and lead to higher prices for consumers.
What To Know
Neither the E.U. nor Canada have issued statements indicating that they plan to unite to harm the U.S., but both have signaled they intend to retaliate to the latest tariffs.
Canada's Prime Minister Mark Carney described Trump's auto tariffs as a "very direct attack." He added: "We will defend our workers. We will defend our companies. We will defend our country."
Ursula von der Leyen, the European Commission President, said: "Tariffs are taxes — bad for businesses, worse for consumers equally in the U.S. and the European Union."
She added that the E.U. will "continue to seek negotiated solutions, while safeguarding its economic interests."
Trump's new tariffs are set to be imposed on all cars and light trucks made outside the U.S.. They will also apply to car parts such as electrical components and engines, many of which are imported from abroad.
Last year, the U.S. imported nearly eight million cars and light trucks worth $244 billion. Mexico, Japan and South Korea were the top sources of foreign vehicles. Imports of auto parts came to more than $197 billion, led by Mexico, Canada and China, according to the Department of Commerce.
Trump's announcement on Wednesday comes on top of existing tariffs announced by his administration, including sweeping duties on imports from China, Mexico and Canada, along with levies on all steel and aluminum products.
Canada and the E.U. already have a free trade agreement called the Comprehensive Economic and Trade Agreement (CETA), which they signed in 2017.
Canada is reportedly in discussions with the E.U. to join a joint drive to break their security dependence on the U.S., according to The Associated Press, citing a senior Canadian government official.
What People Are Saying
Trump wrote on Truth Social on Thursday: "If the European Union works with Canada in order to do economic harm to the USA, large scale Tariffs, far larger than currently planned, will be placed on them both in order to protect the best friend that each of those two countries has ever had!"
The president told reporters Wednesday: "If parts are made in America and a car isn't, those parts are not going to be taxed or tariffed and we will have very strong policing... It's one number and that number is going to be used to reduce debt greatly in the United States and build things."
The White House said in a statement: "President Trump is taking action to protect America's automobile industry, which is vital to national security and has been undermined by excessive imports threatening America's domestic industrial base and supply chains."
What Happens Next
Trump's new auto tariffs are set to go into effect on April 3.
If the taxes are passed fully onto consumers, the average auto price on an imported vehicle could jump by $12,500, a sum that could feed into overall inflation.
View 0 Comments
Submit Correction
View Editorial & AI Guidelines