President Trump threatened European car companies that the United States would impose tariffs on them if they did not agree to follow through with the recently laid out increased steel and aluminum duties. The problem that Trump faces is that many European car companies are rooted in the United States already and have some level of bargaining power when it comes to making sure they are given a mutually beneficial relationship for supplying jobs to U.S. communities. The article points out that some of these fore mentioned jobs are in both Kentucky and Wisconsin, states where Republican leaders Mitch McConnell and Paul Ryan have constituents. This makes the validity of this political threat hard to follow through upon.
"President Trump said his administration would enact in coming days a
law to impose 25% tariffs on imported steel, with 10% targeting imported
aluminum, on national-security grounds." The danger of an action of this nature, as cited by many economists, is that if these tariffs are created unilaterally (instead of through a world trade organization) the resulting effect would be a global trade war. With that said, this action of "national security" could backfire hard on the American economy if accomplished as President Trump suggests.
https://www.wsj.com/articles/trump-threatens-to-tax-european-car-imports-1520110549
1 comment:
I don't see how picking a war with car manufacturers would be a good idea for Trump. He has already said that he is imposing tariffs on steel and aluminum, which could probably end up in the rise of the price of cars since the prices of steel and aluminum might rise with the tariffs. If on top of this he starts putting tariffs on European cars, these might give local manufacturers too much power and might end up in them taking advantage and rising the prices since they would have the power to do so. But these trade wart can affect the entire economy and not only this industry, the results of this trade war could debilitate the US economy and bring a lot of problems.
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