Since his reelection Trump’s tariff has been a focus point of the global economy. The whole world is on the edge with Trump continuing to announce new tariffs. The latest development is the intention of the US government to impose a 25% tariff on imported automobiles, pharmaceutical products and semiconductor chips. This would have serious implications on the global economy. Trump also added that these new tariffs would come into effect around 2nd April. On that day the cabinet members will deliver reports on options to introduce tariffs for international trade.
Trump has pointed out the unfair treatment the US automakers face while exporting to the EU. As of now there is a 10% duty on imported vehicles from the US in EU countries while the duty is 2.5% in the US. But the US has 25% duty on pickup trucks that are not imported from Canada and Mexico. This gives the home automakers in Detroit an advantage.
There is a meeting set between the EU trade chief Maros Sefcovic and the US Commerce Secretary Howard Lutnick, US trade representative Jamieson Greer and National Economic Council director Kevin Hassett. The focal point of the meeting is to discuss tariffs and if they can be avoided to further escalate it into a trade war. Even though Trump has claimed the EU policy makers have already agreed to lower the tariff level similar to the US rate, EU lawmakers have denied his claims. Trump expects the additional pressure would convince the EU to import more of US products including automobiles.
Besides imposing tariffs on the automotive industry he plans to impose more than 25% tariffs on imported pharmaceutical products and semiconductor chips. He also plans to increase the rate over the year. Even though a timetable hasn’t been set, he expects the time will provide industry giants to move to the US to set up new manufacturing bases. He also added that some of the top players are going to reveal new investments in the US in the upcoming weeks.
Additional tariffs on the automotive sector might thrust the industry into uncertainty. The already 10% tariff on top of existing duties of Chinese imports are showing a shift in global trades. It will only expedite when the 25% tariff on Canada and Mexico will come into effect from March 12.