U.S. Auto Tariffs Raised Risk Of Global Trade War

President Trump’s plan to impose a 25 percent tariff on cars and parts has sent a shudder through the global auto industry. Markets in Asia, Europe and the U.S. wobbled yesterday as many automakers’ share prices fell. Trump has threatened to target the E.U. and Canada if they band together to retaliate.

The tariffs on all cars, and some auto parts, exported to the U.S. are set to take effect next Thursday. Mexico, Japan, South Korea and Canada account for about 75 percent of U.S. vehicle imports. 

The tariffs put Trump’s unorthodox trade theory to the test. To the president, tariffs encourage companies to move factories to the U.S., creating more American jobs. Economists say their effects are more complicated and that they could cause significant collateral damage.

Mark Carney, Canada’s leader, said the U.S. was “no longer a reliable partner” and that his country would announce retaliatory tariffs next week. In Germany, whose auto industry is a huge exporter to the U.S., the economy minister, Robert Habeck, said it was “crucial that the E.U. delivers a decisive response to the tariffs,” adding, “It must be clear that we will not back down.”