US tariffs on EU cars adds downside risk to a slowing economy
President Trump will decide within weeks whether to impose tariffs on European cars, a decision that would surely harm an already slowing Eurozone economy.
On Monday the US Commerce Department completed its report into whether automotive imports are a "threat to the US national security", which would give the White House the excuse to slap a tariff on EU cars and parts.
Although no details have been leaked from the report, it is expected that President Trump now has 90 days to decide about imposing tariffs, making the decision to be due around 18 May.
Analysts at Rabobank expect tariffs will be imposed on several countries but some will be granted an exemption. Although, the analyst expect Trump to not impose them immediately in order to give himself some leverage to negotiate with the EU.
Currently, the US is in talks with Japan and the EU and the possible exemption is likely to be conditional on the progress of these negotiations, said Rabobank in their latest report.
If Trump decides to move ahead, it is expected that the tariffs will be in the range of 20-25% and could lead to a one-third reduction in car exports to the US from the rest of the World. For the EU this would mean a reduction in exports of $17bn.